Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

WHITLEY BAY PIER (EXTENSION OF TIME) BILL [Lords]

Read the Third time and passed, without Amendment.

GREATER LONDON COUNCIL (MONEY) BILL

Order for Third Reading read.

To be read the Third time upon Tuesday, 6th June.

WEST SUSSEX COUNTY COUNCIL BILL

Order for consideration, as amended, read.

To be considered tomorrow.

BATH SIDE BAY DEVELOPMENT BILL

BRITISH RAILWAYS BILL

LONDON TRANSPORT BILL

As amended, considered.

To be read the Third time.

THAMES CONSERVANCY BILL

Order for consideration, as amended, read.

To be considered tomorrow.

RAILWAY CLEARING SYSTEMS SUPERANNUATION FUND BILL [Lords]

Read a Second time and committed.

THAMES BARRIER AND FLOOD PREVENTION BILL (By Order)

Order for consideration, as amended, read.

To be considered upon Monday, 5th June at Seven o'clock.

Oral Answers to Questions — NATIONAL FINANCE

Inflation and Unemployment

Mr. Hugh Jenkins: asked the Chancellor of the Exchequer whether, in view of the United Nations report that East European countries are expanding at a faster rate than West European countries without encountering price inflation and unemployment, he will make a study of their solutions to economic problems.

The Chancellor of the Exchequer (Mr. Anthony Barber): No, Sir.

Mr. Jenkins: The International Herald Tribune says, does it not, that what I suggest in my Question is so? In view of the Government's adoption of Socialist policies, for example yesterday, and their conversion to State intervention and to nationalisation, as in the case of Rolls-Royce, will they not find the Common Market too addicted to old-fashioned capitalism to suit their taste? Will they now withdraw and consider an application to join Comecon?

Mr. Barber: Such a study would not be worth while because we already know a great deal about the policies pursued by countries in Eastern Europe, for example the policy similar to that of the last Labour Administration relying on detailed compulsory control of prices and incomes. We know also that strikes in these countries are few and far between, perhaps because the future prospect for militants tends to be somewhat uncertain.

Mr. Tebbit: If my right hon. Friend undertakes the study, will he give some thought to economic cost-benefit studies which might be done on the influence of sending trade unionists to Siberia or using tanks to put down strikes in East Germany, and those other practices which go on under the East European regimes which are so popular with hon. Members opposite?

Mr. Barber: We should not take too narrow a view of this, because I understand that the trade unions in Eastern Europe perform a useful function in keeping workers informed about Government policies, and it may well be that there is something to be learned from that.

Value Added Tax

Mr. Spearing: asked the Chancellor of the Exchequer if he will state the amount of revenue he expects to collect in respect of children's shoes in the first full year of operation of value added tax.

The Minister of State, Treasury (Mr. John Nott): My right hon. Friend, the Chancellor of the Exchequer, promised during the debate in Committee on the Finance Bill on 16th May that there is to be an inquiry about the medical aspects of children's footwear, the outcome of which may well affect its treatment under value added tax. If VAT were imposed at 10 per cent. on footwear of a kind suitable for young children's wear it is estimated that it would yield £12 million in a full year.

Mr. Spearing: If the tax is eventually levied on children's shoes, will the Minister of State agree that the £12 million would fall by and large on families already paying relatively little tax, and where additional children in the family would mean many additional shoes having to be bought? Will he reconsider imposing the tax on these articles?

Mr. Nott: To zero-rate all children's footwear would be an inefficient way of giving relief to low-income families, since much of it would go to families which did not require such help.

Dr. Stuttaford: Is the Minister of State aware that the figure of £12 million is still disputed by a great many people in the shoe industry? The suggestion of an inquiry into children's foot defects and their shoes has met with widespread approval, and we now want to know when the inquiry will report. Will it report before the Report stage of the Finance Bill so that we may have another opportunity to tell the Chancellor how we feel about VAT on children's shoes?

Mr. Nott: I am glad that my hon. Friend welcomes the inquiry. My right hon. Friend the Chancellor has said that it will be completed in good time for any consequential decisions to be taken before the VAT comes into operation next April. The figure of £12 million is the best estimate we have available at present.

Mr. Joel Barnett: The Chancellor made clear in the debate that the inquiry would be on the basis of an open-minded consideration—presumably contrary to his previous closed-minded consideration. Will the hon. Gentleman give the House an assurance that, if the inquiry recommends that VAT should not be imposed on young children's shoes, it will not be imposed on them?

Mr. Nott: We must wait and see what the inquiry brings out. I repeat the words which the hon. Gentleman used. My right hon. Friend has said that he will make up his mind on the basis of a completely open-minded consideration of what the inquiry reports.

Purchase Tax

Mr. Hunt: asked the Chancellor of the Exchequer whether he will set up machinery to examine the extent to which purchase tax reductions are passed on to the consumer.

Mr. Nott: No, Sir. Purchase tax will be abolished next year, and in any case experience has shown that purchase tax reductions are generally passed on to the consumer.

Mr. Hunt: Does not my hon. Friend realise that a racket has been going on, particularly in toiletry and cosmetics? Is he aware that the jar of Max Factor hair dressing that I am holding cost 39p before the Budget and, in spite of the 20 per cent. reduction in purchase tax, still costs 39p? Should not the public have some redress against blatant profiteering of this kind, which undermines and sabotages the Chancellor's fight against inflation?

Mr. Nott: If certain trades or industries have not passed on the whole reductions, it is very disappointing, but this is a matter for the commercial judgment of the traders concerned.

Mr. Molloy: Does not the hon. Gentleman realise that his extraordinarily shaky and vacillating reply should convince him of the need to set up machinery to examine whether purchase tax and other reductions are passed on to the consumer, and that he might include the building societies, which increase mortgage interest rates when Bank Rate is raised but do not reduce them when it is subsequently lowered?

Mr. Nott: The hon. Gentleman's point about building societies is in no way related to purchase tax.

Mr. James Hamilton: asked the Chancellor of the Exchequer whether he will relieve from purchase tax dental packs given to children starting primary school; and if he will make a statement.

Mr. Nott: Toothpaste and plastic beakers are chargeable whether sold in packs or separately, but if such packs were issued free to local authorities by the manufacturers, no purchase tax would be payable.

Mr. Hamilton: Is the hon. Gentleman aware that Lanarkshire County Council got these packs free, but now, because of the increased cost, the company concerned has found it necessary to impose a charge? Is he further aware that the Secretary of State for Scotland has given a sympathetic hearing to the point of view we have expressed to him? On that basis, and in the interest of children's teeth in Lanarkshire and in Scotland as a whole, is the hon. Gentleman not prepared to waive this tax, bearing in mind that the company and the local authority do not make any money from it?

Mr. Nott: I know of the case mentioned by the hon. Gentleman, but we cannot just waive purchase tax in a particular case. That would not be possible. Under the value added tax, however, which will replace purchase tax in due course, toothpaste, for example, will effectively have its rate cut by the equivalent of 8½ per cent., assuming a 10 per cent. VAT rate. There will be a small rise of 2½ per cent. on beakers, but the tax on toothpaste will be substantially cut.

Pensioners (Taxation)

Mr. Moate: asked the Chancellor of the Exchequer what was the tax liability of a couple aged over 65 years whose sole income was a pension of £900 per annum, in the years 1968–69, and 1969–70; and what is the figure for the year 1972–73.

The Chief Secretary to the Treasury (Mr. Patrick Jenkin): In 1968–69, the couple paid £104·75 income tax. In 1969–70, they paid £99·00. They will pay no tax at all in 1972–73.

Mr. Moate: Does my hon. Friend agree that the total relief from tax of a

large number of pensioners represents a major social achievement, which has been widely welcomed by large numbers of people? About how many pensioners will benefit from the latest Budget measures?

Mr. Jenkin: I cannot answer that question without notice, because it depends very much on what the pensioners' other income may be, but if my hon. Friend puts down a Question I shall do my best to answer it.

Mr. Healey: Is the Minister aware that the value of the tax reductions has been exactly wiped out by the enormous rise in prices over which the Chancellor has presided in the past two years?

Mr. Jenkin: I am aware of nothing of the sort. Prices are rising at half the rate of a year ago, and less than the rate when the right hon. Gentleman's Government were in office.

Estate Duty

Mr. Douglas: asked the Chancellor of the Exchequer what estimate the Treasury has made of the numbers who will be exempt from estate duty if the whole of the estate is left to the surviving spouse for the capital ranges £15,000, to £20,000, and £25,000 to £30,000, respectively.

Mr. Patrick Jenkin: About 4,000 and 1,500.

Mr. Douglas: Does the hon. Gentleman accept that the total cost of the remissions in estate duty is well over £60 million in one year? Will he contrast that with the penal reductions in social security benefits to people who have very small capital sums set aside, sums of less than £1,000? These people are left to try to live for one week on about £4.

Mr. Jenkin: I am not sure how far the sort of comparison to which the hon. Gentleman invites my attention is valid. I am certain that raising the threshold and giving the relief on estate duty to widows has been widely welcomed—and not only on this side of the House.

Reflation

Mr. Knox: asked the Chancellor of the Exchequer if he will make a statement on the operation of his reflationary


measures introduced in July, 1971; and what estimate he has made of the extent to which they have worked through the economy.

Mr. Barber: As a result of the July measures, together with the steps taken in the Budget last year to reflate the economy, the rate of growth of domestic product rose sharply to an annual rate of about 4½ per cent. between the first and second halves of 1971. Because of the dislocating effects of the coal strike, it is not possible to provide an estimate of the effects of the July measures in the current half-year, but the latest unemployment figures show that the increased demand is now working through to the labour market.

Mr. Knox: Would my right hon. Friend care to estimate the time lag between the introduction of reflationary measures and the point when they are fully effective, particularly in relation to unemployment? Does he agree that it is important that the length of this time lag should be established if the standard of demand management in Britain is to be improved?

Mr. Barber: I only wish that in regard to both restrictionist and expansionist policies it were possible to estimate a little more accurately what the time lag is, but this is a very difficult area.

Dr. Gilbert: As the Chancellor has made great play of the recent reduction in unemployment, will he confirm that most of the benefit has so far been confined to the most prosperous parts of the country, namely, the South-East? Will he repudiate the smug reply of his hon. Friend the Chief Secretary to my right hon. Friend the Member for Leeds. East (Mr. Healey) about the rise in prices? We read in the Financial Times of a meeting at Chequers over the weekend where prices were supposed to be the main issue of concern. If they are not to the right hon. Gentleman, they certainly are to the public.

Mr. Barber: My hon. Friend was absolutely right, and the hon. Gentleman was wrong. The country will note the Opposition's somewhat glum reaction to the fall in unemployment, which is in marked contrast to their political glee when the trend was upwards.

Graduated Pension Contributions

Mr. Roy Hughes: asked the Chancellor of the Exchequer how much money per annum would be lost to the revenue by allowing tax relief on graduated pension contributions.

Mr. Patrick Jenkin: About £250 million.

Mr. Hughes: The hon. Gentleman will recall our correspondence on the matter. Does he not feel it is time the Government took steps to iron out this anomaly? In particular, why should people in private pension schemes have preferential treatment over those who are not covered in that way?

Mr. Jenkin: It was the right hon. Member for Cardiff, South-East (Mr. Callaghan) who decided in 1965 to withdraw the allowance for the national insurance and graduated pension contribution, making a corresponding increase in the personal allowance. The reason was very largely the need to avoid the many millions of small tax adjustments that would otherwise have been necessary. In the reserve scheme to be introduced under the reform of national insurance, the share of the contribution of employer and employee is weighted in favour of the employee, who will pay a lower share, which largely offsets the absence of tax relief on the contributions.

Inland Revenue (Staff)

Mr. Sydney Chapman: asked the Chancellor of the Exchequer what is his estimate of the total number of civil servants needed to administer the new value added tax and proposed unified income and surtax systems with tax credits when introduced; and how this figure compares with the number needed to administer selective employment tax, purchase tax and income and surtax in mid-1970.

Mr. Nott: I cannot give estimates in the form requested, because the responsibilities of staff engaged on these taxes extend to other taxes as well. But as my hon. Friend the Chief Secretary said on the Second Reading of the Finance Bill, staff savings could well exceed 10,000 by the time the tax reform programme is complete.—[Vol. 835, c. 882–3.]

Mr. Chapman: Will my hon. Friend confirm that, when this radical reform of the taxation system is completed, it will be not only more equitable but easier to administer and simpler to understand? Does he agree that it will be very welcome if the ever-increasing escalation in the number of civil servants is at least halted by these radical reforms?

Mr. Nott: The details of one aspect of the tax reform programme, the tax credit scheme, will be spelled out for the consideration of the House and the general public in a Green Paper to be published later in the year. We hope that this scheme will represent a real simplification and not a mere redistribution of the work load. We are talking of a reduction of between 10,000 and 15,000 civil servants during this period.

Mr. Sheldon: Is the hon. Gentleman aware that the House will find it difficult to understand why a tax which is easier to administer will require 6,000 extra civil servants? Is he aware that even without them the number of civil servants is greater than when the Government took office? How does that fit in with the Tory election pledge to reduce the number of civil servants?

Mr. Nott: The hon. Gentleman is well aware that we are introducing the value added tax, which I think is what he referred to in the first part of his question, because we believe it to be a better tax. The wider question of the number of civil servants generally is obviously one for the Civil Service Department, and the Parliamentary Secretary to that Department, and not for me.

Income Tax

Mr. Edward Taylor: asked the Chancellor of the Exchequer how much income tax he estimates will be paid by a married man with two young children and earning £30 per week in 1972–73; and what were the comparable figures three and six years previously.

Mr. Barber: In 1966–67, a married man with two young children would have paid £4·39 tax on weekly earnings of £30. In 1969–70, he would have paid £4·88. This year, his weekly tax bill will be cut to £2·84.

Mr. Taylor: Do not these splendid figures show a dramatic transformation compared with the previous situation? Will my right hon. Friend confirm that it is still the Government's policy to continue to reduce the burden of income tax?

Mr. Barber: Yes, Sir. We said that we would cut taxation, and that is just what we have done.

Mr. Healey: Is the right hon. Gentleman aware that, contrary to the statement of the Chief Secretary earlier, the purchasing power of this wage has been cut by over 10 per cent. since the Government took office and that, therefore, there has been a net increase in the loss of purchasing power caused by prices and taxes combined since the Government took office?

Mr. Barber: The right hon. Gentleman is somewhat muddled. If he wishes to have the figures, I will give them. In terms of real disposable income per head, which is the best measurement of the standard of living and which takes account both of increases in the cost of living and taxation changes, between 1964 and 1970 the standard of living rose at an annual rate of 1½ per cent. Between June, 1970 and the end of 1971, it was increasing at a rate of between 2 and 2⅔ per cent.

Building Societies

Mr. Ashton: asked the Chancellor of the Exchequer whether he will now seek powers to control the rate of lending by building societies in view of the rise in house prices.

Mr. Patrick Jenkin: No, Sir.

Mr. Ashton: Is the hon. Gentleman aware that the building societies have condoned price increases of 22 per cent. on houses? Is it not time we had a cooling-off period in house price increases? Is he saying that he does not care about the small savers, pensioners and young couples trying to save for deposits with building societies? Why not step in and protect these people from inflation?

Mr. Jenkin: I remind the hon. Gentleman of what we have done through the ending of mortgage stamp duty last year, taking 96 per cent. of house purchases


out of stamp duty this year, the Lord Chancellor's announcement of the ending of scale fees of solicitors for conveyancing, and the wide range of measures announced on 27th April by my right hon. Friend the Secretary of State for the Environment.

Mr. McCrindle: Does not my hon. Friend recall that, when there was a mortgage famine during the Labour Government's term of office, there was no appreciable drop in the price of houses? Is not the only solution to the situation to which the hon. Member for Bassetlaw (Mr. Ashton) has drawn attention a combination of consumer resistance and the freeing of more land? Is not this exactly what the Government are doing? Would not the building societies be well advised to pay no attention to this attempt to interfere with their lending freedom? Is not the Question a cover for the Opposition's intention to nationalise the building societies as soon as possible and should not they be more forthcoming about their intentions?

Mr. Jenkin: I agree with a great deal of what my hon. Friend has said. I agree also with the answer given to the hon. Member for Bassetlaw yesterday by the chief general manager of the Halifax Building Society, at its meeting yesterday, which the hon. Member attended. Mr. Potter then told the hon. Gentleman that building societies have a duty to hold a balance,
and the balance lies between encouraging the building of new houses, which means having adequate funds available if builders are not to lose confidence, and meeting reasonable demands on reasonable terms without adding to inflation by unduly stretching lending policies to chase house prices.
I believe that the building societies should hold a balance, and that they are doing so.

Mr. Frank Allaun: Is the hon. Gentleman aware that many of us on this side do not want such powers of control because those on lower incomes would lose any chance at all of getting a house? Second, would he agree that the main cause of the increased pressure to buy is the Government's higher rents policy?

Mr. Jenkin: We have always recognised that, if fair rents were paid by those who can afford to pay them, they would

realise the advantage of home ownership. That is why we give tax relief on mortgage interest for those who buy their own houses. I am grateful to the hon. Gentleman far the support expressed in the first part of his supplementary question. I am sure that it is right.

Mr. Nigel Fisher: Would my hon. Friend agree that tampering with the supply of credit will not resolve the problem, which can be met only by an increase in the number of new houses?

Mr. Jenkin: My hon. Friend is absolutely right. By extending the range of spending on which tax relief on interest can be allowed, we are, as my hon. Friend the Minister of State pointed out in our debate on this matter, widening the range where people may spend money that they have borrowed. This, too, will reduce pressure on land, which was the only area left by the Labour Government in their 1969 reform.

Mr. Joel Barnett: In reply to my hon. Friend the Member for Salford, East (Mr. Frank Allaun), was the hon. Gentleman implying that it is Government policy to increase rents to such an extent for council tenants that they will be deliberately forced to buying their own houses?

Mr. Jenkin: I said nothing of the sort. I shall repeat what I said, though if I do not state it in exactly the same words, I hope that the hon. Gentleman will forgive me. If tenants who can afford fair rents reach the point of paying them, they will realise that they would be better off if they bought their own houses.

£ Sterling (Purchasing Power)

Mr. Kaufman: asked the Chancellor of the Exchequer what, on the basis of the General Index of Retail Prices, is the purchasing power of the £ sterling now, taking it as 100p on 18th June, 1970.

Mr. Carter: asked the Chancellor of the Exchequer what is the value of the £ sterling now as compared to the value on 18th June, 1970.

Mr. Skinner: asked the Chancellor of the Exchequer what is the current value of the £ sterling as compared with June, 1970.

Mr. Nott: Taking the internal purchasing power of the £ sterling as 100p


in mid-June, 1970, its value in mid-April 1972 is estimated at 87½p. This estimate is based on changes in the Consumer Price Index between 1970 and 1971 adjusted by movements in the General Index of Retail Prices for the months at the beginning and end of the period. If the estimate were based solely on movements in the General Index of Retail Prices, the corresponding figure would be86½p.

Mr. Kaufman: May I, first, thank the hon. Gentleman for being delicate enough to give the House the exact and accurate figures this time. Is he aware that his shocking announcement that the £ is worth only 86½p compared with its value when the Government came to power reflects only the first impact of the Government's high rents policy? Will he give an estimate of how high the cost of living will soar when the full force of the Housing Finance Bill is felt?

Mr. Nott: If the hon. Gentleman had asked for the figures last time on the basis of the retail price index, I would have given them to him. The latest figures confirm the improvement in price performance which has been achieved in recent months. In the nine months since last July, the retail price index has increased only 4¼ per cent. I remind the hon. Gentleman that between July, 1969 and April, 1970, under the Labour Government, prices rose in that comparable period at the much faster rate of 6¼ per cent. The effect of the Housing Finance Bill on the retail price index will not be large. Many people—and this applies to the most needy—will pay less rent, and for them the cost of living will fall. The increase in rents and rates in April was the same this year as last year.

Mr. Carter: Will the hon. Gentleman not agree that next year, when the VAT is introduced, inflation could run up to about 15 per cent. per annum, thus further eroding the value of the £? In view of this, does he not think that supervisory bodies should be established and controls introduced to protect the consumer?

Mr. Nott: I do not know how the hon. Gentleman works out his figures. Certainly, VAT will yield to the Revenue approximately the same as purchase tax and SET. I do not know where he

gets his wild figure of 15 per cent. It bears no relationship to the facts.

Mr. Bruce-Gardyne: While totally disregarding the absurd comments of the architect of the phrase about the pound in our pockets, may I ask my hon. Friend whether he agrees that there have been slightly perturbing signs of a revival of an upward movement in prices recently, and, in this context, could he confirm the welcome reports in the Press on Monday that the need for more stringent monetary policies and control of public sector expenditure were on the agenda for discussion at Chequers at the weekend?

Mr. Nott: I am not sure why my hon. Friend thinks that there has been some acceleration in price rises. The April figures are not seasonally adjusted, and there is always an above-average rise in prices in April for this reason. The April increase was under 1 per cent., and that is much smaller than in April, 1970 and April, 1971. As to the question of money supply, I am sure that my hon. Friend appreciates that the Government are pursuing expansionary policies. I do not believe that any cutback in the supply of money would have any effect on inflation. It would probably just cut back on the activity rate in the economy, and that is something we do not want to happen.

Mr. Skinner: Is not the money supply situation causing trouble for the building societies and for the Government? As to these 86½p pound notes, may we assume that they are in general use? Do they apply to the railwaymen or is it that when his right hon. Friend was accusing £15-a-week railwaymen of holding the country to ransom—[HON. MEMBERS: "£15 a week? How many?"]—more than there are here—was the right hon. Gentleman under the impression that railwaymen were using something other than these 86½p pound notes?

Mr. Nott: I am sure that the hon. Gentleman is as keen as the whole House is to see an end to the rail dispute. The British Railways Board has made an offer to the unions, which is being put to the ballot, and I do not think that it will help if I comment further on that issue.

Mr. Redmond: This is a perennial Question, identically worded, from the


same hon. Members. Would it not help if they had the monthly figures from my hon. Friend with a full explanation as to what is happening each month? They might then be able to understand the situation.

Mr. Nott: It might help the three hon. Gentlemen opposite who have asked Questions if I sent them a complimentary copy of a fascinating booklet called Statistical News. It would provide them with interesting bedtime reading, and they would then be able to understand how the figures were arrived at.

Mr. Healey: While the House will readily understand the Minister's reluctance to admit the Government's failure to control prices over the last two years, can he now confirm that the taxpayers referred to in Questions Nos. 4 and 9 have had the value of the tax reductions more than wiped out by the collapse in the purchasing power of the £ over the last two years? Will he answer the question instead of dodging it?

Mr. Nott: My right hon. Friend answered that Question. I am not sure how the right hon. Gentleman arrives at his figures, but my right hon. Friend has given the right answer.

Computerised Data Storage Systems

Mr. Leslie Huckfield: asked the Chancellor of the Exchequer what computers are in use currently in his Department; what information is stored on computer filing systems; and what systems of access control exist.

Mr. Patrick Jenkin: The Treasury uses various computer terminals to develop and run economic forecasting models and in connection with the planning and control of public expenditure. For the most part, the information used is of an economic and statistical nature. The system of access control is designed to ensure that only authorised members of Treasury staff can have access to the records.

Mr. Huckfield: I thank the Minister for that assurance, but I remind him that computers in his Department are being used by the Inland Revenue. Is he satisfied that, when they are being used, individuals can have sufficient access to their own tax records? Also, is he aware

that, once proposals for a negative income tax are introduced, other persons will seek access? What will he do about controlling access by other people when that system is introduced?

Mr. Jenkin: I assure the hon. Gentleman, who has a Question about Inland Revenue computers down for Written Answer today, that my right hon. Friend's departments are acutely aware of the need for proper security of computer records. I do not think that it would be possible for individual taxpayers to have direct access to computer output from the Inland Revenue computer, but they are always entitled to discuss their affairs with their local inspector of taxes. As to the tax credit system, I think we must await the publication of the Green Paper and consideration of the proposals when they are made public.

Mr. David Steel: How are the computers and their human assistants getting on at Centre 1 at East Kilbride? Is he aware that the number of complaints I am receiving from my constituents shows no signs of abating?

Mr. Jenkin: There has been a marked improvement, and a tribute was paid in Committee last week by the hon. Member for West Lothian (Mr. Dalyell), who congratulated the Inland Revenue on the great progress that has been made. I am sorry that the hon. Gentleman's constituents have not enjoyed the same improvement.

Balance of Payments

Sir G. Nabarro: asked the Chancellor of the Exchequer whether he will make a statement on the balance of payments in recent months.

Mr. Barber: The current account was in urplus in the first four months of this year, and the underlying balance of payments is sound. Recent trade figures have been distorted by a number of special factors, notably the effects of the coal miners strike.
Last month, we repaid the last of our IMF debts, and for the first time since 1964 we now have no short-term or medium-term official debt outstanding. Our reserves at the end of April stood at the record level of over £2,700 million, and sterling is strong.

Sir G. Nabarro: While congratulating my right hon. Friend on these splendid achievements, may I ask him to direct his attention to the growth of the hire-purchase debt, which was announced yesterday as £1,678 million? Would he consider this in the context of future economic performance?

Mr. Barber: We keep all these matters under review.

Mr. Healey: Would the right hon. Gentleman enlighten the House as to his own interpretation of the extremely worrying recent trade figures? Is he aware that, even taking into account the distorting effect of the coal strike, which we all recognise must have been there, the balance of trade seems to be deteriorating steadily, from a level of £30 million in February to something under £57 million in April? Can he tell the House how soon he expects to implement his undertaking to devalue the £ rather than halt growth?

Mr. Barber: That was not my undertaking. As I said in my Budget Statement—I realise that the right hon. Gentleman was not responsible for these matters in the Opposition at that time—I expected the balance on visible trade to be less favourable this year than last because of the faster growth of imports, but the current balance as a whole should remain in comfortable surplus because of invisible earnings.

Mr. Ian Lloyd: Have the Government in any way altered their policy on the balance between gold and dollars in the central reserve?

Mr. Barber: That raises a wider question. If my hon. Friend will put a Question down specifically directed to it, I shall be happy to answer it.

Mr. Spriggs: The Chancellor spoke about 1964 in an earlier reply. Could he give us the sum of the deficit which the Tory Government left in 1964, after 13 years of Tory rule?

Mr. Barber: I have not got the figure off-hand, but I think that the short and medium-term debt outstanding when we handed over in 1964 was of the order of £70 million. That was all.

Capital Gains Tax

Mr. David Mitchell: asked the Chancellor of the Exchequer how much revenue has been collected through capital gains tax since its introduction in 1965.

Mr. Patrick Jenkin: About £850 million. This figure includes £350 million of corporation tax on chargeable gains, but does not include the £45 million of tax on short-term gains charged under Schedule D Case VD from 1962.

Mr. Mitchell: Does my hon. Friend agree that this represents a significant withdrawal of capital from the economy at a time when investment and job creation should have high priority?

Mr. Jenkin: The Minister of State told my hon. Friend when he last raised this question that we have the tax system under continuing review and, as I think he will acknowledge, under radical reform. I assure him that the future of the capital gains tax will not be ignored in this study.

Consumer Expenditure

Mr. Duffy: asked the Chancellor of the Exchequer if he is satisfied with the rate of consumer expenditure following the Budget proposals; and if he will make a statement.

Mr. Nott: It is too early for the Budget tax cuts to have affected the published indicators, but they will certainly have a favourable effect on consumer spending in the current quarter.

Mr. Duffy: Is the hon. Gentleman aware that the three months moving average of retail sales is still down and that there is no evidence anywhere that retail sales and consumer expenditure are likely to be both substantial enough and sufficiently broadly based to sustain the growth rate which the Chancellor of the Exchequer promised in his Budget statement?

Mr. Nott: While consumer expenditure may not increase exactly in line with the half-yearly forecasts given in the Financial Statement and Budget Report, it is still expected that consumer expenditure will increase at an annual rate of about 5 per cent. over the 18 months


between the second half of 1971 and the first half of 1973.

Mr. Edward Taylor: In general, is my hon. Friend satisfied that the purchase tax reductions are being passed on to consumers?

Mr. Nott: Yes, Sir.

International Monetary Fund (United States Drawings)

Mr. Bruce-Gardyne: asked the Chancellor of the Exchequer whether the United States Treasury has yet taken advantage of its £83 million drawing on the International Monetary Fund to repay short-term indebtedness to the Bank of England.

Mr. Barber: There is some misunderstanding implied in my hon. Friend's Question. The United States has not incurred any short-term indebtness to the Bank of England. My hon. Friend may have in mind the outstanding swap transaction, but this is not a debt.

Mr. Bruce-Gardyne: Even if the sums involved relate to the swap transaction, was there not a clear understanding at the time of this settlement at the beginning of May that the United States would use its drawing to repurchase surplus dollars in United Kingdom accounts? Is it not somewhat unsatisfactory if this understanding is not to be honoured?

Mr. Barber: The mechanics of the Federal Reserve Bank's drawing on the reciprocal swap facility are of a highly technical nature, but, briefly, the effect was to increase forward liabilities on both sides and to give the United Kingdom an exchange guarantee against dollar devaluation. My hon. Friend refers in his Question to a drawing of £83 million. As part of the arrangements for the repayment of the whole of the United Kingdom's outstanding debt to the International Monetary Fund, the United States made a drawing in sterling from the IMF equivalent to £83 million.

Mr. Lipton: Is the right hon. Gentleman aware that the epoch-making announcement which he has just made will be warmly welcomed by all the widows, orphans, sick and unemployed in this country?

National Loans Fund (Advances to Nationalised Industries)

Mr. Albu: asked the Chancellor of the Exchequer what is the latest estimate he has made of the advances that will be required from the National Loans Fund in the year 1972–73 to the nationalised industries as a result of their acceptance of the Government's limit on price increases and of the withdrawal of certain subsidies to railway services needed for social reasons.

Mr. Nott: It is not possible to identify separately the amount by which borrowing by the nationalised industries from the National Loans Fund in 1972–73 will be increased as a result of their participating in the CBI initiative on price restraint. No change has been made in the arrangements for paying grant to the British Railways Board.

Mr. Albu: Is the hon. Gentleman aware that the Government have reduced the finances of the nationalised industries to a greater shambles than they have been in over the last 10 years? Will he ask the Chancellor of the Exchequer to publish a White Paper explaining the principles by which coal, gas and electricity are subsidised but council house rents and commuter fares are not.

Mr. Nott: I do not think that there is any accuracy in the hon. Gentleman's charges, but my right hon. Friend the Chancellor has noted what he said.

Mr. Joel Barnett: As the hon. Gentleman did not answer the previous question when one of my hon. Friends said that he had got all the facts right, will he now say whether it is the Government's policy to allow the nationalised industries to run on commercial lines, and, if so, how he equates that with the idea that they should restrain their prices in the way suggested?

Mr. Nott: The CBI scheme, which the hon. Gentleman knows all about, still has just under three months to run. At the council meeting on 19th April, the CBI decided to defer for three months its decision on the extension of the price restraint policy beyond 31st July. It is very much better to consider these issues as they affect the nationalised industries in the light of the CBI's forthcoming decision.

SCOTTISH COUNCIL (DEVELOPMENT AND INDUSTRY)

Mr. Douglas: asked the Prime Minister if he will make a statement on his meeting with the Scottish Council (Development and Industry) on 12th May, 1972.

The Prime Minister (Mr. Edward Heath): Together with my right hon. Friends the Secretaries of State for Scotland and for Trade and Industry and my noble Friend the Minister of State, Scottish Office, I met representatives of the Scottish Council in Edinburgh on 12th May.
We carried forward our examination of the Scottish economy, and of the opportunities for industrial growth in Scotland, in the light of the Budget and of the White Paper on Industrial and Regional Development, Cmnd. 4942. The Council representatives acknowledged that many of the proposals which they had put forward at our previous meeting in January were reflected in subsequent Government measures.

Mr. Douglas: I thank the right hon. Gentleman for that reply. Did the Scottish Council raise the possibility of extending refinery capacity in Scotland in view of the North Sea oil discoveres? Also, did it raise the very urgent position of the steel industry in Scotland and, in particular, Scotland's capacity to continue making crude steel?

The Prime Minister: The Scottish Council discussed the question of refinery capacity in Scotland, but it expressed itself as satisfied with the new arrangement which we have had since our January meeting, whereby a standing conference of Scottish interests under the Under-Secretary of State for Development brings together all those concerned with oil developments in Scotland, and refinery capacity is one aspect of that.
The Scottish Council asked that the British Steel Corporation's proposals should be brought forward as early as possible and that a final decision should be taken on them. It asked that it should be able to make its views known to the BSC.

Mr. Edward Taylor: Was my right non Friend able to confirm to the Scot-

tish Council that a final decision has not been made about the vital Hunterston steel works project in the West of Scotland? Was the delegation encouraged by the dramatic reduction in Scottish unemployment of 16,000, which is more than the average for the United Kingdom?

The Prime Minister: Certainly, it is much encouraged by the present trend of unemployment in Scotland in that there has been a decrease of 16,000, which is proportionately greater than the decrease for the rest of the country. It was made absolutely plain to the Council that no decisions have been taken about the location of steel plant, and that any reports to the contrary were quite incorrect.

Mr. David Steel: Can the right hon. Gentleman say whether the Oceanspan proposals, on which Lord Polwarth was particularly keen, were further considered? Does the right hon. Gentleman agree that this matter is particularly important in view of our entry into the Common Market?

The Prime Minister: I agree about its importance. We discussed this matter very fully at the January meeting, but not very much further when we met in Edinburgh.

PRESIDENT NIXON

Mr. Whitehead: asked the Prime Minister what communications he has had with President Nixon since 9th May. 1972.

The Prime Minister: My communications with President Nixon, as with other Heads of Government, are confidential.

Mr. Whitehead: As President Nixon is currently running as hard in Moscow for re-election as the Prime Minister is in Bexley Heath, and there may not be very much time for him, is it not time that we communicated to the American Government a view about the total illegality in international law of the mining of the ports in the Gulf of Tonkin; or does he share the disgraceful sycophantic view of the Foreign Secretary that these actions are, in some way, justifiable?

The Prime Minister: If the hon. Gentleman wants to treat this as a serious question, he might have worded his supplementary question more seriously. I do


not accept his allegations about mining in international waters.

Mr. Adley: Does not my right hon. Friend agree that it is entirely legitimate for the United States to have a treaty with South Vietnam against external aggression? Does he not further agree that the British Government are entitled to support those of their allies who honour their treaties?

The Prime Minister: President Nixon has a right to settle his policy in the light of the attack by North Vietnam on South Vietnam, and that is what he has done.

PRESIDENT POMPIDOU AND CHANCELLOR BRANDT

Mr. Alfred Morris: asked the Prime Minister what communications he has had with President Pompidous and Chancellor Brandt since 9th May.

The Prime Minister: My communications with President Pompidou and Chancellor Brandt, as with other Heads of Government, are confidential.

Mr. Morris: In his Godkin lectures at Harvard, the right hon. Gentleman proposed Anglo-French nuclear sharing. What steps has he taken to implement that proposal since he became Prime Minister? Has he communicated with, and is his proposal approved by, M. Pompidou and Herr Brandt, and what is the effect of his proposal on our signature of the nuclear Non-Proliferation Treaty?

The Prime Minister: I am grateful to the hon. Gentleman for his reference to the Godkin lectures, which are still available in a publication by the Harvard Press. What I proposed in the lectures was that the two nuclear forces should be held in trust for Europe with a European Council. That is rather different from the phrase "nuclear sharing" used by the hon. Gentleman. As I have told the House on two previous occasions, in neither of the discussions between President Pompidou and myself was this matter raised. I did not think that nuclear defence was an appropriate subject for discussion.

Mr. Pavitt: Has the Prime Minister had any communication with President Pompidou on the statement by Dr. Grey-

Turner widely reported in the British medical Press that, under pressure from the Common Market, we may have to alter the basic concept upon which the National Health Service is built? Is the right hon. Gentleman aware that the view has been widely expressed that we may have to change from the concept of 85 per cent. of the cost being met from taxation to the system adopted in the Common Market countries?

The Prime Minister: No, Sir, this is not a subject I have discussed with President Pompidou. I understood that the arrangements for the professions were in the first place to be left in the hands of those representing the professions. I am perfectly prepared to ask my right hon. Friend the Secretary of State for Social Services to inquire into the point which the hon. Gentleman has raised. Generally, the Common Market will move to a situation in which the costs of industry and the social services are approximately the same.

GRADUATES (EMPLOYMENT)

Mr. Carter: asked the Prime Minister if he is satisfied with co-ordination between the Department of Education and Science and the Department of Employment in obtaining employment for newly qualified graduates; and if he will make a statement.

The Prime Minister: Yes, Sir. Responsibility for assisting newly qualified graduates to obtain their first jobs rests with the appointments services of universities and colleges. There is close liaison between these services and those of the Department of Employment.

Mr. Carter: I thank the Prime Minister for that reply. Will he confirm that the Government have no intention of using the present levels of unemployment among graduates as an excuse to reduce the number of university places?

The Prime Minister: That is certainly not the intention. As I have said on the last two occasions when this matter has been raised at Question Time, the intention is to reduce unemployment and provide greater opportunities for graduates, not only in their own specific subjects but also in the wider field of industry and administration.

Sir D. Renton: Is my right hon. Friend aware of the need to encourage many more people to become graduates in medicine, among whom there would not be the slightest chance of unemployment?

The Prime Minister: What my right hon. and learned Friend says is correct in regard to medicine and veterinary surgery.

Mr. Kaufman: Is the Prime Minister aware that, at the end of 1971, 8½ per cent. of Manchester university graduates were unemployed, compared with 5½ per cent., which was bad enough, at the end of the previous year? What specific and positive action are the Government taking to reduce the level of unemployment among graduates in Manchester?

The Prime Minister: Last Thursday, I gave the figure provided by the University Grants Committee for unemployed graduates all over the country at the end of 1971, namely 3½9 per cent., which was not very different from the national average. The expansion of the economy, particularly in engineering, will have helped the graduates in the hon. Gentleman's area.

CUP FINAL, WEMBLEY

Mr. Ashton: asked the Prime Minister how many times in his official capacity he has attended the Cup Final at Wembley.

The Prime Minister: I attended the Football Association Cup Final earlier this month and the League Cup Final last year.

Mr. Ashton: Is the Prime Minister aware that, if he chooses to go to the Cup Final next year, he will find that the spectators will be paying £19,000 in value added tax for that one match, which is equivalent to 19p per spectator for British entry into the Common Market? Will the Prime Minister visit one or two third and fourth division clubs and tell them how they can avoid bankruptcy when the Government impose the value added tax?

The Prime Minister: The VAT was fully debated in Committee of the whole House on the Finance Bill, and I have nothing to add. I agree that there is no doubt that the crowd at Wembley will be just as large next year as it was this year.

Sir R. Russell: Is my right hon. Friend aware that his visits to Wembley Stadium have been greatly appreciated by the staff and all those who have come into contact with him? Will he accept as many invitations to Wembley as he possibly can, especially on Saturday afternoons?

The Prime Minister: I shall endeavour to please my hon. Friend, who has previously extended invitations to me.

PERSONAL AND CONFIDENTIAL RECORDS

Mr. Leslie Huckfield: asked the Prime Minister what general rules exist governing the transfer of personal and confidential information between and among the Departments of his Administration; and whether he will make a statement.

The Prime Minister: In some cases, there are statutory provisions. Otherwise, it is for individual Departments to give giudance to their staff on the handling of such information.

Mr. Huckfield: Is the Prime Minister aware that a massive collection of personal and confidential information will come under the auspices of the Department of the Environment from those who submit themselves for means tests under the Government's proposals for fair rents? How does he expect the people who are supposed to be coming forward for means tests under the provisions of the Housing Finance Bill to do so when they pretty well have to sign away their birthright to get a means test?

The Prime Minister: I cannot agree with that, especially when the Minister of Housing and Local Government in the previous Administration was strongly in favour of a system of rent rebates.

Mr. Paget: Will the Prime Minister tell us how he manages without Lord Wigg?

The Prime Minister: Very satisfactorily, Sir.

COMMONWEALTH CONFERENCE

Mr. Molloy: asked the Prime Minister what discussions he is having with other Commonwealth heads of


Government about the next Commonwealth Conference.

The Prime Minister: None at present, Sir. It is the responsibility of the Commonwealth Secretary-General to co-ordinate consultation on Commonwealth Prime Ministers' Conferences.

Mr. Molloy: Will not the Minister convene a Commonwealth Conference in view of what has been revealed in our discussions on the European Communities Bill—notwithstanding the disgraceful guillotine—which has caused great concern within the Commonwealth? Will he pay as much attention to the views of the Commonwealth countries as he pays to those of the EEC countries, because there are many in the Commonwealth who feel that he has no more interest in the future of that organisation than he has in the future of the House of Commons and the British nation?

The Prime Minister: I cannot accept any of that. It is 16 months since we last had a Commonwealth Conference. Under the previous Administration, as the right hon. Gentleman the Leader of the Opposition will remember, two years four months elapsed between Commonwealth Conferences. This matter is best left to the Secretary-General of the Commonwealth, who has contact with all the countries and can establish when the time is right for us to have a Commonwealth Conference.

Mr. Foley: Is there not a new situation in Rhodesia about which all Commonwealth countries are concerned? Is it not incumbent upon the Prime Minister to take the initiative and to consult his colleagues in this respect?

The Prime Minister: Of course, consultation has gone on with our colleagues in the Commonwealth on the subject of Rhodesia all the time we have been in Government. I do not feel that it is necessary to have a meeting of the Heads of Commonwealth Governments to carry on that consultation on Rhodesia.

Mr. Harold Wilson: So that the House and the country may not gain a wrong impression from the period mentioned by the right hon. Gentleman, will he acknowledge that between the summer of 1964, when there was a conference presided over by his right hon. Friend,

and 1970 there were five full-dress Commonwealth Conferences?

The Prime Minister: Yes, Sir. I was only making the point that a greater interval than 16 months between the holding of Commonwealth Conferences is perfectly satisfactory.

BAIL

Mr. Clinton Davis: Q9. Mr. Clinton Davis asked the Prime Minister if he is satisfied with the coordination between the Home Office and the Department of Health and Social Security concerning prisoners remanded on bail and their families: and if he will make a statement.

The Prime Minister: Yes, Sir.

Mr. Clinton Davis: Is the Prime Minister aware of the considerable hardship felt by a large number of families because bail has been denied, and will he take action to avoid that situation? What action will he take to avoid the situation in which about half those remanded in custody ultimately receive no custodial treatment?

The Prime Minister: The Question refers specifically to those who are remanded on bail. As I think the hon. Gentleman knows, the Home Secretary has set up a full inquiry and has taken a considerable number of steps to improve the position of those who are remanded on bail and those who are in custody. The social services are available for the families of those remanded in custody when they wish to seek them. If the hon. Gentleman has a specific point he wants looked into, I am sure that my right hon. Friend the Home Secretary will be able to do so.

RHODESIA

The Secretary of State for Foreign and Commonwealth Affairs (Sir Alec Douglas-Home): With your permission. Mr. Speaker, and that of the House, I wish to make a statement about Rhodesia.
On 25th November, 1971, I announced the appointment of a Commission under Lord Pearce to ascertain whether the proposals for a settlement which I had agreed with Mr. Smith were acceptable


to the Rhodesian people as a whole. The Pearce Commission has completed its difficult task with independence and devotion, and the text of its comprehensive report will be in the Vote Office when I sit down. The Government are very grateful to Lord Pearce and his fellow Commissioners.
Lord Pearce and his Deputy Chairmen have reached the conclusion: first, that the great majority of those who gave their opinions to the Commission had a sufficient understanding of the content and implications of the proposals to pass judgment on them; second, that the proposals were acceptable to the great majority of Europeans; third, that the majority of Africans rejected them. The Commission has therefore concluded that the people of Rhodesia as a whole did not regard the proposals as acceptable as a basis for independence.
The Commissioners explain in detail their reasons for reaching this conclusion, their approach to their task and the methods which they used for testing opinion. They consider the extent and effect of intimidation, the validity of the claim that the chiefs speak for their people on political matters, the measure of understanding of the proposals and the reasons given for acceptance or rejection of them. Inevitably, there are some paragraphs which deal with particularly contentious issues and which will be widely and properly debated both here and in Rhodesia.
Honourable Members will find in the report a wide variety of views expressed by people of all races. I hope that particular attention will be given to those opinions and memoranda given by persons who are clearly intent upon furthering multi-racial co-operation. They illustrate very clearly the dilemma facing anyone who tries to re-establish in Rhodesia the basis for a multi-racial society.
The choice lies starkly between a compromise settlement, which by definition will not wholly satisfy anyone but which will gain for the Africans substantial new opportunities for advancement, and a rapid and complete polarisation of the races and the prospect of conflict.
It may be that on further reflection the majority of Rhodesians, African and Europeans will decide to choose the way of compromise and to work together for

orderly political change. I devoutly hope so for the sake of all Southern Africa.
When hon. Members have read the report, I hope that they will study once again the terms of the proposed settlement. Although the proposals have failed to gain acceptance, they still represent a genuine attempt to find a sensible and in all the circumstances a just solution of Rhodesia's special social and political problems.
It will be apparent to hon. Members that the negotiations of November followed by the Pearce Report have created a situation in which many new ideas will be current and in which positions which hitherto have been inflexible could become more fluid. It is clear, therefore, that in these circumstances there must be time for reflection, particularly by Rhodesians, for the problems of Rhodesia can essentially only be solved by Rhodesians themselves.
Her Majesty's Government feel that plenty of time should be given in which the position can be clarified and that meanwhile no door should be closed. We feel that the best atmosphere for constructive discussion and advance will be provided if we maintain the situation as it is today, including sanctions—[HON. MEMBERS: "Hear, hear."]—until we can judge whether or not an opportunity for a satisfactory settlement will occur. If there are to be processes of consultation inside Rhodesia they are likely to take some time, and meanwhile the status quo will remain.

Mr. Callaghan: First, we all wish to join the Foreign Secretary in thanking Lord Pearce and his Commissioners for their work. Secondly, on a point of detail may I ask this question: since the right hon. Gentleman said that sanctions will continue, does this include the Beira patrol? Thirdly, may we also take it that there will be provision for a full debate on this matter in the House at an early stage? If so, I have no doubt that the time will be provided by the Government.
As for the account of the report given to the House by the Foreign Secretary, is it not clear that on this occasion, the first opportunity the African people have had to declare their view, they have given an unmistakable verdict? Although I


have not seen the Pearce Report, I have had the advantage of reading what all the newspapers have had to say about it. Does it not follow from this that if there is to be a constructive dialogue, if people are to think again, it will be much better if the Africans are brought in at the beginning of the discussions rather than allowed to exercise a veto at the end?
Does the Foreign Secretary intend to communicate to Mr. Smith that it is the view in this country that Mr. Smith should embark on discussions with the African leaders at an early stage, including Bishop Muzorewa? If he will not undertake to do this at that stage, could the Foreign Secretary give an undertaking that at no stage, however fluid people's positions may become—positions which hitherto have been inflexible—will the Government recommend a settlement which goes outside the ambit of the five principles? If one did not know the Foreign Secretary, one could say that suspicious people could place many varying interpretations on the wording used in the statement. However, I am bound to say to the Foreign Secretary that I am sure this is not in his mind. Therefore, I am asking for a very clear undertaking that he intends the five principles to remain as a foundation of the Government's policy, and I repeat that the Africans should be brought into consultation as soon as possible so that Mr. Smith and his fellow European Rhodesians can see that their future lies in so doing.

Sir Alec Douglas-Home: I am obliged to the right hon. Gentleman for his thanks to Lord Pearce and the Commissioners. I can answer his points of detail quite shortly. Since the Beira patrol is part of the sanctions arrangements it will remain. As for a debate, I am sure that this can be arranged through the usual channels. I ought to tell the House that the report is long and it will take some time to absorb the whole of it.
The right hon. Gentleman is right in saying that the Africans have answered "No". When he reads the report he will find that some Africans, though by no means all the Africans, are opposed to the proposals, and a great many of them think that there is no guarantee that the proposals will be carried out by

the Smith Government. There are various aspects of the matter which the right hon. Gentleman will no doubt digest when he reads the report.
I agree with the right hon. Gentleman that the next stage must be discussions inside Rhodesia between the racial groups. This is something I should like to see happen; I cannot ensure that it does happen but it ought to happen.
The right hon. Gentleman asked about the five principles. I have never seen any difficulty about those principles. The proposals were within the five principles that Mr. Smith and I made, and any future proposals must be within the five principles. I should not at this stage like to commit myself exactly to the method which should be used in regard to the fifth principle in future; we are looking at the matter entirely anew and completely blind. [HON. MEMBERS: "Oh!"] When hon. Members have read the Pearce Report, they will conclude that it will be difficult to have the same sort of operation within a short time scale or within a year or something like that, but we shall keep a completely open mind on this matter.

Mr. Callaghan: Is the right hon. Gentleman aware that he is in danger of undermining his whole position by his use of the words in the latter part of what he has just said? Does he accept that, in whatever way it is construed, the voices of the African people must determine whether an agreement is acceptable? If so, apart from what I agree is the second-rate approach of a Pearce Commission, can the right hon. Gentleman see any other method of doing this than by inviting the Africans to vote on the proposals on the basis of "one man, one vote", as they clearly understand what is before them?

Sir Alec Douglas-Home: When the right hon. Gentleman has read the Pearce Report he will see that it is not easy to decide this matter. But I accept that any future arrangement must be within the five principles. I think that when hon. Members have read the report they will see that it is wise to reserve opinion as to the exact method to be used to decide how the opinions of the Africans and the other races in Rhodesia should be represented to Her Majesty's Government in the event of any new solution being found.

Mr. Sandys: While accepting the view of the Foreign Secretary, which I think all reasonable people must share, that the verdict of the Pearce Commission must be accepted and that in the circumstances there is no alternative but to maintain the status quo, may I ask my right hon. Friend, who referred to the need for a period for reflection, whether in addition to reflection he will also undertake confidential consultations with other Governments in Africa and elsewhere before the announcement of any new policy decisions?

Sir Alec Douglas-Home: We have kept in close touch with all the Governments of Africa on this matter, especially our Commonwealth partners. We shall continue to do so. Again in answer to the right hon. Member for Cardiff, South-East (Mr. Callaghan), I stress that I hope that he will not pursue the line that I am trying to do something that is not straightforward. I am not. I have made a straightforward report to the House and I have said quite clearly that we accept the findings of the Pearce Commission. But on future policy, when we are in an entirely unknown situation and when a new situation will be created in Rhodesia, we must retain a certain flexibility of approach. But, yes, we shall keep in touch with all those Governments.

Mr. David Steel: Does the right hon. Gentleman agree that his experience and that of the previous Government suggests that Mr. Smith and his Government are not people with whom it is possible to negotiate on any honourable basis? While it is right to keep the door open, will the right hon. Gentleman undertake that any future negotiations will include representatives of the African majority at the negotiating table? Secondly, the right hon. Gentleman has talked about maintaining the status quo on sanctions. Is he prepared to consider making them more effective, and has he studied the proposals of the African Bureau in its interesting document on the working of sanctions?

Sir Alec Douglas-Home: I hope that the hon. Gentleman will direct his strictures on sanctions to people other than us. We are the only country which has been keeping sanctions. Every month we draw the attention of the United Nations to breaches of sanctions, but no

one takes the slighest notice. That is a very unsatisfactory situation, and I am sure that the hon. Gentleman will recognise that. In any future negotiations—and I cannot foresee that there will be any—it is my opinion that the initiative must come from the different races in Rhodesia acting in concert. Then Her Majesty's Government will have something that they can consider constructively.

Sir Robin Turton: In view of what my right hon. Friend has said about the way that sanctions are being evaded, to the extent that only British businessmen are keeping them and that every other country is evading them so that last year Rhodesian exports were in value within 3 per cent. of the pre-sanctions level, will not a policy of continuing sanctions make a compromise settlement more difficult and drive Rhodesia towards South Africa?

Sir Alec Douglas-Home: We have given this matter very close consideration. What we in this House must try to do is to create a climate in which in Rhodesia and internationally these latest developments—first, the proposals for a settlement and, secondly, the Pearce Report—can be considered in an orderly way. On the whole, the preservation of the present position in relation to sanctions gives the best opportunity for these matters to be considered in a sober and constructive way.

Mr. Alexander W. Lyon: Since the Africans have made it clear that they will not consent to anything to which they have not been party, and since it is clear that Mr. Smith is unlikely in the near future to include Africans in the negotiating process, is it not obvious that somehow we have to intensify sanctions? Would it not be right for Her Majesty's Government to go back to the United Nations and make the very point that the right hon. Gentleman is making now, since the climate of opinion, especially amongst the Afro-Asian bloc, has changed since sanctions were first imposed and there is now a real desire to make them work?

Sir Alec Douglas-Home: The machinery is there for making sanctions as effective as they can be. It is the will of the different countries which is absent. The machinery is there, and we


have played our full part in bringing breaches to the notice of those who breach sanctions. But the political will is not there in some cases.

Sir H. Legge-Bourke: While I warmly endorse my right hon. Friend's plea that we should study not only the Pearce Commission's report but also the original terms offered, and having myself been one of those who supported the previous Government on the imposition of sanctions in the first place, may I ask my right hon. Friend at least to realise that there must come a time when it no longer makes sense to go on, as it were, cutting off our economic noses to justify our political faces? Therefore, in asking us for time to contemplate what has happened and, it is to be hoped, for the Rhodesians themselves to contemplate the future, will my right hon. Friend realise that there must be some time limit within which this may take place and that some new initiative in the United Nations to make clear one way or the other whether sanctions are to be fully implemented and continued or abolished must come?

Sir Alec Douglas-Home: I am asking for time from the House on this matter because I believe that the stake is very high. The chances are very slim. But if we can create a multi-racial society in the Continent of Africa through multiracial co-operation, this is a prize that we should not throw away lightly. I am very conscious of what my hon. Friend says but, nevertheless, I think that what we are proposing is right because we are playing for a big prize.

Mr. Michael Stewart: In view of the right hon. Gentleman's answers about sanctions, does he agree that the publication of this report is an appropriate opportunity for a new move at the United Nations to get the more effective observance of sanctions, that the right hon. Gentleman ought to be able to mobilise for this purpose the support of Commonwealth countries and many other countries in Africa and Asia, and have not those countries which will be our partners in the European Economic Community a special duty to help us about this?

Sir Alec Douglas-Home: I see exactly what the right hon. Gentleman is after. I can only answer him in this way. He

tried very hard. I have tried very hard. Neither of us has so far been successful.

Mr. Dodds-Parker: Can my right hon. Friend give any indication of the extent to which intimidation might have been involved one way or the other? I have no doubt that he is aware that there are widespread allegations of this.

Sir Alec Douglas-Home: Lord Pearce reports that no intimidation was used on behalf of the Rhodesian Government, and that very extensive intimidation was used by various African organisations. But he concludes that the intimidation used did not affect the opinion of the great majority of the Africans, and so he reports.

Mr. Faulds: Now that the Foreign Secretary and his right hon. Friend the Prime Minister have failed in their disastrously misjudged efforts to legitimise a bastard régime—[An HON. MEMBER: "It takes one to recognise one."]—and I do, will the right hon. Gentleman now consult the people of Southern Rhodesia by calling together a constitutional conference of their true representatives? What steps did the right hon. Gentleman take to ensure the future safety and freedom of those in Southern Rhodesia who were courageous enough to voice their opinions about that tatty police State?

Sir Alec Douglas-Home: I think that the right hon. Gentleman the Leader of the Opposition will remember that we did not rejoice when he failed to bring off a settlement, and I hope that there will not be rejoicing, so to speak, on the other side of the House if now we have not reached a settlement ourselves.

Mr. Faulds: Answer my question.

Sir Alec Douglas-Home: I shall, but the hon. Gentleman must allow me to do it in my own way. I hope he will remember that if this settlement, or something very like it, does not go through the Africans will forfeit a great deal, and many advantages. There will be no justiciable declaration of rights, there will be no abolition of the income tax regulator which controls the number of seats for Africans in Parliament, there will be no halt to racial discrimination, there will be no development programme for the African development areas and the tribal trust areas, and there will be no progress towards majority rule. The hon.


Gentleman must recognise that if there is no compromise settlement of this sort the Africans will forfeit all those things, and I must bring that home to the House.

Mr. Evelyn King: Were not sanctions initially commended to the House, I think by the right hon. Member for Huyton (Mr. Harold Wilson), on the ground that they would pressurise Mr. Smith into an agreement? Is it not a fact, rightly or wrongly, that agreement was reached? Is it not therefore inevitable, whether immediately or later, that the grounds on which sanctions are continued must erode as there is no logical basis left for them?

Sir Alec Douglas-Home: There is a great deal of truth in what my hon. Friend has said, but I have to decide what is the best climate that can be created for constructive discussions inside Rhodesia. I think, therefore, that it is better, on balance, to go on as we are, because it is in that climate that the races in Rhodesia would have some chance to get together, and, in particular, I have in mind the international effect of ending sanctions now.

Mr. Harold Wilson: Is the right hon. Gentleman aware that I can endorse what he said, that the then Opposition did not rejoice when we failed to get agreement on HMS "Tiger" and HMS "Fearless"? In fact what happened was that the right hon. Gentleman who was then the Leader of the Opposition capitalised at his party conference on what he called "a great divide" over Rhodesia. Is the right hon. Gentleman not aware—since he brought this up—that he and all his right hon. and hon. Friends voted against a Motion after Mr. Smith rejected the "Tiger" settlement which condemned the Rhodesian régime for rejecting those proposals?

Sir Alec Douglas-Home: I can only speak for myself. I believe that at all times during the debates on the attempts which the right hon. Gentleman was making to get a settlement we supported him right the way through. I hope that we can in this House from now on try to get some inter-party agreement on the main ingredients which there should be in any future settlement in Rhodesia. I cannot say that the chances are good. The room for manoeuvre of any Foreign

Secretary is very much limited as a result of the Pearce Report's rejection of the proposals, but one must still hope that there is a prospect. I repeat that if we cannot in every way try to create a multi-racial society in this part of Africa the outlook for the whole of Southern Africa is very dim, indeed.

Mr. Hugh Fraser: While hoping that my right hon. Friend, proceeding from the present basis, will be able to build a bridge yet again with Rhodesia, may I ask whether he will circulate as a background paper for the benefit of the House a list of those countries which are carrying out sanctions, those which are in breach, and also the effect of an intensification of sanctions on a country such as Zambia, which, if it were to apply sanctions, would itself almost become bankrupt?

Sir Alec Douglas-Home: What it amounts to is that many countries are evading sanctions.

Mr. Wilson: Governments?

Sir Alec Douglas-Home: No. Governments do not admit to it, but the evasion is going on. I shall consider my right hon. Friend's suggestion about circulating a report on the evasions. I think that it might be useful.

Mr. Paget: As it is the black African countries, and in particular Zambia, which are the foremost of sanction breakers—[An HON. MEMBER: "Nonsense."]—is not the prospect of tightening sanctions at the United Nations rather remote?
Secondly, is not the real choice between a satellite State attached to South Africa and an independent Rhodesia with a somewhat, or very, unsatisfactory constitution? In the choice between those unfortunate alternatives, do we not have some responsibility to the Africans to see that the more disastrous choice is not made?

Sir Alec Douglas-Home: I think that the particular position of Zambia is understood. It has bought a great deal of grain from Rhodesia. I think that from the start the particular geographical position of Zambia has been understood.
My answer to the last part of the hon. and learned Gentleman's question is "Yes", but I hope the House will realise


how little responsibility we have left, and how little authority we can exercise in this matter. Provided that the House understands that, I think it will recognise that there has to be a compromise settlement between the two extremes, right and left, in Rhodesia.

Mr. Brocklebank-Fowler: Is my right hon. Friend aware that many of us welcome his statement as the logical conclusion of a sadly unsuccessful attempt to negotiate an honest and honourable settlement, and that in view of that many hon. Gentlemen opposite should find it possible to withdraw the unkindly remarks which they made to him when he embarked upon this policy?

Sir Alec Douglas-Home: I do not think that I should ask any hon. Gentleman opposite to withdraw anything that he has said but, in response to what my hon. Friend has said, I re-emphasise that this is a very serious matter. If we miss the chance of creating a multi-racial society in that part of Africa the whole position in the southern part of Africa will harden and polarise on racial lines, and that would be the worst thing that could happen for this country or, indeed, for any other.

Mr. James Johnson: While fully accepting the right hon. Gentleman's sincerity in all these matters, may I ask whether he realises that today he uttered the same platitudes that he uttered during the debate when we discussed the matter before the Pearce Commission went to Rhodesia?
Does the right hon. Gentleman not feel as all the other African States adjoining Rhodesia do that Smith is beyond redemption, if I may use that word? As Smith came to the negotiating table only because of sanctions, is not the honourable and logical course to step up sanctions to the utmost possible limit which this nation can?

Sir Alec Douglas-Home: The hon. Gentleman must realise that we are not guilty here. If he reads the Pearce Report he will find that the sort of sweeping strictures that he has made are not made by the Commission.

Mr. Harold Wilson: In view of the right hon. Gentleman's strictures on other

Governments, including by implication in his answer to my hon. Friend the right hon. Member for Fulham (Mr. Michael Stewart), European countries, and his invocation of what he said was our experience, is he aware that, while the previous Government took up a considerable number of cases where they found that there was contraband of this kind going on, in almost all cases of which my right hon. Friend and I had knowledge action was taken by the Government, and had it not been it would have been a matter to be taken up between Foreign Secretaries, and we always accepted that responsibility. Is the right hon. Gentleman saying that Governments, including European Governments and others associated with this matter in so many ways, are actively conniving at breaches of sanctions? Is he saying that when Her Majesty's Government bring up cases action is not taken on them, or is he just saying that traders are slipping in behind the backs of Governments concerned? It is a serious allegation that the right hon. Gentleman has made.

Sir Alec Douglas-Home: I made no allegation whatsoever, as the right hon. Gentleman will see if he looks at what I have said. We must appreciate that we in this country have done everything we can, yet sanctions are being breached by a number of countries. I shall not go any further into the methods which have been used.

Mr. Faulds: On a point of order, Mr. Speaker. I asked the Foreign Secretary a very important question as to what steps he had taken to ensure the future safety and freedom of those who had given evidence to the Pearce Commission in Rhodesia. I received no answer.

Mr. Speaker: Order. That is not a matter of order.

Mr. Faulds: The Foreign Secretary wishes to answer.

Mr. Hastings: I think that it would be generally agreed in the House that, as my right hon. Friend the Foreign Secretary said, this is a matter of very great importance indeed. Many of us have followed this question for seven years or more with great care. Would it not be possible to extend the question period a little, by half an hour or so?

Mr. Faulds: Perhaps the Foreign Secretary would answer.

Mr. Speaker: Order. This is a matter for my judgment. There has been an indication that there will have to be a debate in due course on this matter, and right hon. and hon. Members will want to read the Report. This is a matter for my discretion, and I have to protect the other business of the House.

UNOCCUPIED PROPERTY (INCREASE OF RATE)

4.1 p.m.

Mr. Geoffrey Finsberg: I beg to move,
That leave be given to bring in a Bill to amend the provisions of Section 17 of, and Schedule I to, the General Rate Act 1967 relating to the liability to be rated in respect of unoccupied property.
I am grateful for such a full House for the introduction of my 10-Minute Rule Bill. [Interruption.] However, clearly its audience is diminishing rapidly.
The Bill would alter the rating of unoccupied properties. The General Rate Act, 1967, first introduced optional powers for local authorities to levy a rate on unoccupied properties of 50 per cent. Broadly speaking, this applied to commercial properties after they had been unoccupied for three months and to residential properties after six months.
The time has come to alter that in at least three respects: first, to make the system mandatory on local authorities, second, to increase the percentages and, third, to plug some of the loopholes that have been exposed.
I know from experience that the introduction of the scheme which is allowed under the 1967 Act, which binds councils to operate it for a period of seven years, needs very careful thought. In the London Borough of Camden, where we have operated the scheme since 1968, it is interesting to note that we have collected over £2,138,000 in empty property rates, at a cost of less than £85,000. No less. than £300,000 of this sum has come from the notorious Centre Point, the owners of which have shown naked and selfish greed throughout the years that the property has existed. I think that it is now accepted that if the percentage is right the scheme is workable.
In broad terms, under the Bill the percentages would go up from 50 per cent. to 90 per cent. after a further period of six months of unoccupation, and to 125 per cent. after a further 12 months, all subject to the safeguards of appeal which already exist in the General Rate Act, 1967, although clearly some alteration will have to be made in order to prevent some of the prevarication which can occur at present.
There can be no reason for depriving the community, in the form of ratepayers, from its share of the revenue; nor, in my judgment, would most shareholders in a public company permit the waste of their assets which can happen and which, certainly in the case of Centre Point, has happened for far too long. Therefore, I believe that a full or penalty rate charge would achieve swifter results and would get the property into beneficial use much more quickly.
The time allowed for the introduction of the Bill permits me to illustrate only three of the loopholes which I should like to see plugged. The first is that empty shops which are let for charitable use should revert to their normal rating provision as soon as the charities cease to occupy them. At present, if a shop is occupied by a charity for the sale of Christmas cards, when it ceases that use it remains as a charitable use and the local authority cannot make its rate claim under the 1967 Act.
Secondly, nationalised bodies should not be exempted where property is normally owned and let by them. Where it is normally owned by them and let, and when the property has been rated for the same period as any other, the nationalised bodies, too, should become liable for rates.
Thirdly, the process of being able to divide a hereditament by letting, for instance, one floor out of three and then claiming empty rating relief on the two

remaining floors with an entirely fresh period of grace must cease. On the balance of the hereditament the relief should apply only as if no division had been made.
I hope that the brief outline I have given of the purposes of the Bill will be sufficient for its introduction. If, as I fear seems likely, the House is good enough to grant me leave to introduce the Bill but does not find time for a Second Reading and the following stages, I hope that my remarks will enable the Government, in their promised review of local government finance, to remedy some of the existing defects and to adopt at least some of the ideas proposed in the Bill.

Question put and agreed to.

Bill ordered to be brought in by Mr. Geoffrey Finsberg, Mr. Andrew Bowden, Mr. Michael Grylls, Mrs. Elaine Kellett-Bowman, Mr. Ernie Money, Mrs. Sally Oppenheim, Sir Brandon Rhys Williams, Mr. Michael Roberts.

UNOCCUPIED PROPERTY (INCREASE OF RATE)

Bill to amend the provisions of Section 17 of, and Schedule 1 to, the General Rate Act 1967 relating to the liability to be rated in respect of unoccupied property: And the same was read the First time; and ordered to be read a Second time on Friday, 16th June, and to be printed. [Bill 146]

Orders of the Day — SUPPLY

[19TH ALLOTTED DAY],—considered.

Orders of the Day — STEEL INDUSTRY

Mr. Speaker: Before calling upon the hon. Member for Chesterfield (Mr. Varley) to move the Motion, I want to inform the House that I have selected the Amendment in the name of the Prime Minister and the names of his right hon. Friends.
I want also to say something about the length of speeches. I should like to thank right hon. and hon. Members for their help yesterday. There were four Front Bench speakers, and they took less than 30 minutes each on average. I was, therefore, able to call 20 hon. Members from the back benches, and they averaged about 12½ minutes each.
I have a similar problem today. There is a very long list of hon. Members who wish to speak. I hope that there will be the same degree of co-operation and restraint. Even so, I am afraid that there may be some disappointments.

4.8 p.m.

Mr. Eric G. Varley: I beg to move, That this House deplores the Government's statement on the steel industry of 8th May, 1972 which, providing no guarantee whatever of an expanding British steel industry, consequently creates further unnecessary uncertainty for the British Steel Corporation, arouses fears about employment prospects among the workers in the industry, and, necessitating as it will large-scale imports of steel in the future, involves hazards for the country's balance of payments.
In moving the Motion, it is right to draw the attention of the House to the curious case of the Secretary of State who did not bark in the night. This is not the first debate that we have had in this Parliament about steel. The statement that we had on 8th May was not the first statement we had had about the steel industry. We had debates on 18th March. 24th May and 30th June, and the Secretary of State took part in all those debates. We had statements on steel on 5th April, 27th April and 28th June.

The Secretary of State made all three statements. In the last of these statements on 28th June the Secretary of State confidently said,
In due course I look forward to completing this series of announcements."—[OFFICIAL REPORT, 28th June, 1971; Vol. 820, c. 33.]
The Secretary of State is responsible for the steel review. That has been made clear in this House. Yet, two weeks ago it was the Minister for Industry who was put up to make a statement which was harmful and damaging to the industry while the Secretary of State cowered behind him on the Front Bench.
Today we are informed that it is the Minister for Industry who will defend that statement, whilst once again the Secretary of State lurks behind him. [Interruption.] Yet it was the Secretary of State who so bravely proclaimed to the Scottish Tories in Perth recently that Ministers must stand up and be counted for their decisions. He also said that they should face the whistles and catcalls that result.
It does not take much courage to talk like that to docile Scottish Tories, but it is not good enough for the right hon. Gentleman not to have followed through all these things when he set them up. After all, the Secretary of State is responsible for the steel industry, and the powers of the Iron and Steel Act are vested in him.
The Secretary of State's discourtesy to this House would not be so bad if that statement of two weeks ago had in any way helped to lift the uncertainty that hangs over the future of the British steel industry. It would not have been so bad if the Secretary of State had come to the House and confirmed an expanding steel industry. But all we had on 8th May was a miserable apology for a statement which still leaves the whole situation in an unsatisfactory state. However, the review is not yet over. We are told in carefully chosen words that the Government are to continue to be closely involved in the strategic decisions of the continuing review. So, after two years of Conservative Government the steel industry has less of an assured future than it had when they came to power.
It is important to remember the principles upon which the Government were


elected. Their 1970 election manifesto pledged:
We will progressively reduce the involvement of the State in the nationalised industries, for example, in the steel industry…".
In October, 1970, at the Conservative Party conference, the Secretary of State elaborated on this theme:
a word about the nationalised industries.…Government must withdraw from its perpetual scrutiny and commentary upon the managements concerned—a process which undermines authority, constitutes a permanent alibi for inadequate performance and represents a serious inhibition to recruitment and the development of efficient management from within".
But what has happened? The then Minister for Industry, now the Minister of Posts and Telecommunications, the right hon. Member for Bournemouth, West (Sir J. Eden), has continually and constantly interfered with the affairs of the British Steel Corporation. We all know what the Prime Minister did on that famous Friday afternoon when he interfered and instructed the Secretary of State to issue a general direction. The Government, instead of withdrawing from their perpetual scrutiny and commentary on the British Steel Corporation management, as the Secretary of State insisted they must, have continually imposed upon that management the constitutional monstrosity of the Joint Steering Group, about which I shall have something to say later.
The Joint Steering Group was composed of civil servants and the officials of the British Steel Corporation. Certainly the civil servants had no mandate to interfere with the British Steel Corporation, but they were interfering at the early stages in the day-to-day management decisions. They were acting on political criteria alien to the rôle of civil servants.
It was bad enough that the Corporation was subjected to that kind of political meddling, but far worse that the meddlers were not answerable to this House. If the Government are to go in for this kind of technique, this kind of joint steering group, this kind of operation, they should at least have put a Minister directly in charge as a member of the Joint Steering Group.
That is not all. The Minister told us that the Government have also had advice from external consultants Who were these external consultants? Can

we be told whether they were British or foreign? How much were they paid? To what information were they given access? Why should those external consultants have available to them information which is being denied to the House of Commons?
The Joint Steering Group was, as we pointed out, an unacceptable device, but at least its members were public servants. So why should the livelihoods of British steel workers depend on the say-so of anonymous external consultants? We want to know who they were, where they came from, how much they were paid and what information they had. If they can have such information, the House of Commons should be able to have it. The Minister must give us this information.
Instead of being allowed to get on with the job of making, selling and exporting steel and providing assured employment for steel workers, the management of the British Steel Corporation has been reduced to a state of wimpering impotence. There is no doubt about that when one looks at what is being said. In 1972 the Corporation nervously welcomed the statement made by the Minister for Industry on 8th May which, at a maximum target range, gives the British Steel Corporation 7 million tons less than it targeted for in 1971 and is more likely to be 15 million tons below that target.
There is a frown on the brow of the Minister for Industry. If he looks at the statement made by the Secretary of State for Trade and Industry he will see that he publicly announced to the House that the British Steel Corporation's target in 1971 was 35 million tons by 1975 and 43 million tons by 1980. If the Secretary of State says that is wrong, then before this debate finishes I will show him that reference in HANSARD.
No wonder the Chairman of the British Steel Corporation, Lord Melchett, in a television interview with Kenneth Harris on Sunday night, complained about Government intervention, interference, investigation and endless questioning. No wonder he pleaded for an end to driving from the back seat.
In his statement two weeks ago the Minister for Industry talked about a production range by 1980 of between 28 million and 36 million tons. However, on


the same day he gave the game away when, in answer to my right hon. Friend the Leader of the Opposition, he said:
whether they go at the top or the bottom of the bracket will depend on what additional capacity is built, where it may be needed, and to what extent changes are needed in the present production plants."—[OFFICIAL REPORT, 8th May, 1972; Vol. 836, c. 919.]
The Minister for Industry is admitting that the Government are targeting for 28 million tons, although anything which can be achieved over and above that figure would be nice. A figure of 28 million tons means no expansion. It has been pointed out already that the Corporation's existing capacity is around 27 million to 28 million tons, so the Government are budgeting for almost no growth at all. No wonder, that in the delicate language that the Government now use, it is said that the British Steel Corporation accepts—not agrees—their figures.
What they do not say is that Lord Melchett has publicly stated that the difference between the top and bottom range was affected by hopes for exports. Does that mean that the Government are writing off the British Steel Corporation as an expanding exporter? Are the Government saying they have no confidence in the Corporation having any export potential? Nor do the Government draw our attention to another ominous comment made by Lord Melchett about the review, when he said:
If demand does grow faster than has been anticipated we could have a period of steel shortages.
That is what the Chairman of the British Steel Corporation said.
So after all this interference and all these delays nobody—and that includes the Government and the BSC—has the faintest idea about the future size and structure of the BSC. The older constituent parts such as Irlam and Shelton and the Newport tube works are left in the dark about their prospects. We are told that their fate depends upon the Government's latest planning study; but surely we have a right to more information about this? My right hon. Friend the Member for Newton (Mr. Frederick Lee) will have something to say about Irlam if he catches your eye, Mr. Speaker, but there is concern about the future in all these areas.
I understand that the Minister for Industry has been meeting representatives of the Shelton workers, and I hope that today he will say something about the position there. But the Minister's meeting, highly welcome as it is, raises another question. Is the future of Irlam, Shelton and the Newport tube works being decided by the Government? Is that what meeting with the Shelton workers now means? If it does not mean that, what is the purpose of the meeting? Or can we have it confirmed that this is a matter for the Corporation? I think the Minister nodded a few moments ago to say that he has been meeting the Shelton workers. He may have been meeting other workers also.

Mr. Roy Hughes: Workers at the tube works in Newport cannot understand why the works is to be closed down. It has been established for over 50 years, and throughout that period it has been highly profitable. It occupies a valuable site and has a very good industrial relations record. We cannot see any commercial reason why it should be closed.

Mr. Speaker: Order. I must warn hon. Members who intervene that they are prejudicing their chances of being called.

Mr. Varley: My hon. Friend the Member for Newport (Mr. Roy Hughes) is right. We want to know the answers because the Government have been blowing hot and cold on this matter. In debates they have been saying that these are matters for the BSC, but now the Minister has been meeting workers from one of the older plants and we want to know exactly what the Government's rôle is.
There are, however, more fundamental questions which need to be answered. Some careful students of the Minister's statement infer that saving the older works would, on the Government's own estimate of future capacity, leave hardly any scope for new projects. In his speech at Perth on 12th May the Secretary of State seemed very strongly to be ruling out hopes for a new green field works, as reported in the Financial Times on 13th May. The Minister himself pointedly, and probably provocatively in some senses, gave that impression two


weeks ago. He said that major expansion projects such as a new green field site would rule out reprieve of the old works.
People in the old steel areas want to know what their future is. Have we got to the stage where it is a question of "either/or"? Has the squeeze been put on the Corporation to that extent? But the more fundamental question to which we need an answer is: what is happening about future expansion'?
The Economist called the Minister's statement a "steel contraction plan". Does that mean, for example, that the green field site, on which the development areas are banking so much, is no longer on? Have the Government ruled it out or is the real truth, which the Government are anxious to conceal, that the green field works will be on some foreign field? A senior executive of the Corporation has been quoted as describing a massive European steelmaking complex with BSC participation as 'very, very certain". We have all seen com'ments about that in the newspapers. So is that the plan? Is the plan not to export British steel, which would provide jobs at home, but to export instead steel employment prospects? I hope the Minister will be able to tell us, because this is absolutely crucial.
So the "steel contraction plan" seems to have ruled out to some extent a green field site in a development area. Can the Minister tell us whether the brown field site has been ruled out, too? I know my hon. Friends from the North-East are basing their hopes on expansion at a brown field site. Does it mean, as the Economist again speculates, that there will be room only for a couple of the currently fashionable mini-mills? Is that the Government's thinking, that it is no longer a question of a vast integrated complex but of building mini-mills? We are entitled to information about this because of the speculation that there has been about it.
The fact that these questions still have to be asked 14 months after the deep-seated review of the industry was first announced by the Secretary of State is a sign of the demoralised state of the industry under this Government. This demoralisation is not only confined to management in the BSC. It goes right

through the industry. When the review was first mooted the Secretary of State for Trade and Industry assured the House and my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) that there would be discussions with the steel trade unions. But there has been none.
I have a letter from the TUC Steel Committee which states categorically that the Minister refused to be drawn into any discussion at all and that that meeting, described by the Minister on 8th May, which took place in March, did not clear the situation up at all. It is worse than that. The letter from the Secretary of the TUC Steel Committee referring to the meeting says:
meetings with the former Minister for Industry were a waste of time as he refused to give any information, other than that publicly available, about the BSC's development on the pleas of either confidentiality or Parliamentary privilege".
Why was the TUC denied information which was made widely available, I assume, to the Government's mysterious external consultants. Why are the external consultants immune from the pleas of confidentiality and parliamentary privilege which made the meetings with the TUC Steel Committee such a farce?
This is a disgraceful way in which to treat some of the most responsible men in the British trade union movement. It is certainly in direct contravention to the specific ministerial pledge and the pledge that was given by the Secretary of State to my hon. Friend the Member for Ebbw Vale? The steel trade unions have a fine record of co-operation with management, and, whatever the industry's future shape and size, it is certain that this co-operation will be needed more than ever in the future. But what a way to win it, treating the steel trade unions in the way the Government have treated them.
I hope the Minister for Industry can tell us that he will do something more positive by way of consultation than what has taken place so far. If not, I suppose that at some stage, if there is trouble in the steel industry involving the steel trade unions, we shall probably find that the Chancellor of the Exchequer will call a hurried meeting at the Conservative Central Office and talk about blackmail or something like that, and the Secretary of State for Employment will probably go to those mysterious creatures, the Tory


trade unionists, and speak about wild talk.
If the Government cannot take the steel trade unions into their confidence about something as crucial as this, the seeds of tomorrow's industrial trouble are being sown today by the Government's aloof and uncaring attitude. The men in the steel industry have a right to know their employment prospects. It is already known that the Corporation's short-term rationalisation plans envisage a reduction of more than 50,000 by, I think, 1975. The workers have a right to know whether those who remain will be part of an expanding steel industry in which the job prospects are secure, or whether they will lose those job opportunities.
The Industry Bill which we debated yesterday will not be worth the paper it is written on if we are likely to take away the employment prospects which go with an expanding steel industry. As the Secretary of State continually tells us, 50 per cent. of the steel industry is located in the development areas, so if there is to be a rapid rundown, if there is not to be the expansion that everyone expected, not only will the Government have trouble with the steel unions but there will be difficulty in generating employment as the Government want to do under their Industry Bill.
Most of all, the steel workers need to be assured that there is sufficient steel-making capacity in this country or that if there is insufficient we shall not have to rely on imports, taking away their livelihood. If we are to achieve the sustained economic growth which everyone hopes will take place and which the Government have said will take place, the situation will be as the Economist describes it:
… if the Government is right"—
that is, on the steel contraction plans—
BSC's future is one of a sharply decreasing share of both home and export markets. The slack would be taken up in the main by imports.
That may well be what the Government want. The Minister of Posts and Telecommunications, when he was Minister for Industry, was once persuaded to that point of view, that it was not necessary to build industry. I marvel at the shortsightedness of the Government, first in so mismanaging the fuel policy that we have got into balance of payments difficulties on that front, with the growth of im-

ported oil, and now in deliberately crippling the steel industry, again at the expense of the balance of payments.
The Cabinet must have discussed this increasingly difficult problem at Chequers yesterday. It is a pity the Secretary of State is not taking part in the debate, because he could tell us whether the Cabinet discussed the worsening balance of payments situation. It must have considered the depressing trade figures so far this year. It must be aware of the estimates that in the first few months we have a balance of payments deficit. The Government inherited a £600 million balance of payments surplus from the Labour Administration, and all that has been frittered away.
The Government's plans for the steel industry will make the balance of payments situation worse. It is calculated on the British Steel Corporation's export record that a capacity of 36 million tons will be needed if the Government achieve a 3½ per cent. growth rate in the economy. But in his Budget the Chancellor planned not for a 3½ per cent. growth rate but for a 5 per cent. growth rate, so how could the Minister for Industry have the nerve in his statement to talk about a more realistic approach? Will he clear up this matter once and for all by telling the House the Government's estimate of British steel consumption by 1980? Is it that their estimate is exactly the same as that of Lord Melchett and his team but that they have not the confidence in the Corporation or those who work in it? How much steel will need to be imported on a 5 per cent. growth rate, assuming only 30 million to 35 million tons produced? The Minister must have that figure. The Joint Steering Group had it, and presumably the external consultants have had it. Why cannot the House have this information?
In his speech to the Tory Party conference in 1970 the Secretary of State for Trade and Industry modestly said:
I know my way around the industrial world, and I mean to put that knowledge to use.
He has put that knowledge to use, and for the steel industry the result is the biggest shambles we have ever known. There is no clear plan. There is a 25 per cent. production range without realism or meaning. Anyone who says that it has meaning or realism must be living


in cloud cuckoo-land. A modicum of certainty and optimism is necessary for the steel industry if only to face up to the challenges the Government keep telling us we shall have. But we have had no assurance about the job prospects, in a summer overshadowed by 900,000 unemployed. In an industry which should be equipping itself for a major exporting potential, we are faced with a Government quite happy to accept an accelerating rate of steel imports on an unprecedented scale. That is what the statement means.
The question goes much deeper than that. Do the Government really want a strong, thriving and expanding British steel industry, or do the decisions they have announced this month mean that they have, in effect, written off steel as a growth industry? It certainly looks like that to us. Have the Government lost hope and confidence in the steel industry, when countries on the continent of Europe are fostering efficient and profitable steel industries? What we want from the Government, though I do not think we shall have it today, is a message of confidence for the industry, its workers and management.
In that spirit, we have the right to ask for clear, urgent decisions. All the information that has been made available to the Joint Steering Group and the mysterious consultants should be made available to the House in the form of a White Paper. Why cannot we have the information? If the Government are saying with certainty that their plan is right, why do they not give us the information, so that we can make a judgment? The workers in the industry have a right to know what their future is being based on. Parliament has a right to know, since it is the ultimate authority.
We were promised honest and open government by the Prime Minister when he came to office. We have not had honesty with regard to the statement. It is because we have not had honesty and openness that we put down the Motion and shall divide the House tonight.

4.40 p.m.

The Minister for Industry (Mr. Tom Boardman): I beg to move, in line 1, leave out from 'deplores' to the end of the Question and to add instead thereof

'welcomes the Government's statement of 8th May on the steel industry with the announcement of the continuing high momentum of investment as a major contribution to the flexible development of an efficient modern and profitable industry, thus able to provide greater security of employment and to make its full contribution to an expanding economy both regionally and nationally'.
The hon. Member for Chesterfield (Mr. Varley) did less than justice to himself by the way in which he opened the debate. I can well understand why hon. Members opposite are afraid of their right hon. Friend standing behind their back—that is one of the hazards of the Labour Party. To have the support and comfort of my right hon. Friend behind me is something that I welcome.
The hon. Gentleman was critical of the Joint Steering Group being composed of officials and the British Steel Corporation. There was an outside representative, a deputy chairman of ICI. The group prepared a report, the outcome of which and the decisions upon which are the responsibility of Ministers. There is no ducking the responsibility for making the decisions on the advice obtained. The hon. Gentleman knows that Ministers in all Governments are constantly receiving advice, particularly through officials, and to suggest that my right hon. Friend and I are hiding behind such a report is an abuse of the situation.

Mr. Gerald Kaufman: Mr. Gerald Kaufman (Manchester, Ardwick) rose——

Mr. Boardman: The hon. Member for Chesterfield referred to the consultants. They were from the American part of McKinsey's. They were given no confidential information. They were appropriate to be consulted because the advice they tendered was on world trends in steel. I can think of nothing better than getting outside advice, detached from any parochial view which we may have in this country, by calling in a firm of outside consultants, able to view world trends and the particular position of the British Steel Corporation in order to get an overall pattern which could help the Joint Steering Group in preparing its report.

Mr. Alex Eadie: Mr. Alex Eadie (Midlothian) rose——

Mr. Boardman: No. Let me develop my case. The hon. Gentleman may well have an opportunity of catching the eye of the Chair. It may also be that, as


usually happens, I shall come to the very point he wishes to raise.
The hon. Member for Chesterfield made some severe criticism about the relationship between Lord Melchett and the Government. He referred to the television interview on Sunday. It would have been fairer if he had pointed out that the interview was no less critical of the relationship between the Labour Government and the British Steel Corporation—if, indeed, there was any criticism in the interview.
The hon. Gentleman then suggested that there had been some divergence of view and that pressure had been applied for some months to persuade the Corporation and Lord Melchett to put in or to accept a figure which was not there. The hon. Gentleman should accept that, as I said on 8th May, this was an agreed report, in which the Corporation fully participated and the result of which it fully accepted. I said on 8th May, and I will repeat, that the Corporation was inclined to take the higher end of the bracket rather more than the other members of the Joint Steering Group. The hon. Gentleman should not try to fabricate or blow up this apparent division between the Government and the Corporation. It does no service to anyone. My experience, short as it has been, is that there is full understanding between the Corporation and the Government both on the objective and on the common approach. If the hon. Gentleman is anxious to promote the interests of the steel industry, it would be far better to encourage that approach rather than try to create divisions.
The hon. Gentleman referred to an apparent failure or unwillingness to see the TUC Steel Committee. My predecessor saw the committee, as he intended doing, on 29th March. But the hon. Gentleman would have been one of the first to object if the contents of the statement made on 9th May had been released or given to the committee on that earlier occasion. The committee was told on 29th March that my predecessor—I confirmed this when I succeeded him—would welcome a meeting with it as early as possible after the statement had been made to the House. I am hoping to arrange a meeting shortly. The committee knows that I wish to meet it, and I shall welcome the opportunity to do so at the earliest possible moment.
I had hoped that the hon. Gentleman would have made clear the grounds on which the Opposition have been launching their criticism. I had hoped that he might have said what the Opposition would like to have seen done. I hoped in vain, but perhaps those of my right hon. Friends with longer experience at the Box could have warned me that I was unlikely to hear from tthe Opposition a common view. I have been waiting to hear what the Opposition want. Do they want several brown field or green field sites, each with a capacity of 8 million to 10 million ingot tons per year? I understand that they do. Do they want to retain the heritage works, where much money has been and is now being spent? Of course they do.
What, then, of those works where the iron and steelmaking plant is reaching the end of its economic life? Do they believe that these should be closed or that such capacity should be replaced where it is? I understood the hon. Gentleman to say that he thought it should be replaced. If he did not, then some of his hon. Friends do, and he had better make clear where he stands.
The Opposition appear to have added up the potential capacity of these three courses—green fields, brown fields and heritage works and all existing plants—and to have arrived at a total annual production above the Joint Steering Group bracket. This, they say, must be the demand forecast and the Joint Steering Group must be wrong. What a way to run a business!

Mr. John Morris: The hon. Gentleman is challenging the Opposition to say what they really want? Would it not, then, be prudent of the Government to provide for the Opposition, the trade union movement and the country the basis upon which the Joint Steering Group reached its recommendations? On that basis we could have a proper and informed discussion.

Mr. Boardman: If the right hon. Gentleman will wait, I shall come to the most important question of the basis upon which the demand has been forecast.
It would be so easy if all that an industry had to do was to calculate what it could make, given unlimited funds, with the assurance that its total production


could then be profitably sold. Not one word has been said by the hon. Member for Chesterfield to show how he has assessed future demand, what method of forecasting he used, what world and domestic factors were taken into account. He merely assumed that the figures of the Joint Steering Group were wrong. His criticism is solely on the basis that the higher the demand he predicts the less does he have to reduce the realities and say to the House or his own back benchers that they cannot have green field or brown field sites and the heritage works and keep open and modernised all existing plants.
The Government with the Steel Corporation have had a more realistic approach. They have assessed within the Joint Steering Group the various factors at home and abroad that would affect demand up to 1980. They have had the advice of outside consultants on world steel trends. They have had within the Steering Group a great wealth of experience and information and have arrived at a wide bracket as a guide for capacity requirements up to 1980.
These are estimates, not targets, enabling the Corporation to examine alternative options most effectively to meet the possible demands within that bracket. These are guides to enable the maximum flexibility to be built into the plans. They are estimates, determined not by the wishes of the Government or the Corporation or the Opposition but by external factors over many of which they have little control. They have balanced such adverse factors as world overcapacity—for example, in Japan, and hon. Members will know the position there—against such favourable influences as the opportunities which Europe presents and our rate of economic growth.
The hon. Gentleman asked what would be the position about imports if the rate of economic growth is at the rate predicted by the Chancellor. The rate of economic growth taken in these predictions is consistent with medium-term estimates of 5 per cent. referred to in the Budget and in the longer-term is consistent with a growth of gross domestic product substantially higher than we have had on average since the war and much higher than in the last 10 years.
Many hon. Members will be aware that the growth of gross domestic product is not consistently reflected in the growth of demand for steel. Mature economies tend to be decreasingly steel-intensive. The rate of steel consumption per head appears to decline as a fraction of gross product when the latter passes 2,000 dollars per head per annum. For example, in the United Kingdom during the four years 1966–70 gross domestic product rose by 2·2 per cent. per annum yet the trend of steel consumption rose by 0·7 per cent. per annum. That proves the disparity between the two trends. A further factor that has been taken into account is the competition that must be increasingly expected during the later years of this decade from alternative materials——

Mr. Varley: Mr. Varley: Ah!

Mr. Boardman: The hon. Gentleman says "Ah". Perhaps he will wait to see what the alternatives are.
Competition must increasingly be expected from alternative materials such as plastic, aluminium and concrete.
The effect of our entry into Europe was a relevant consideration in the Steering Group and the Government agree with Lord Melchett on the positive benefits that will accrue to the industry from joining Europe. It will benefit from the wider market, the lowering of tariffs and the dynamic effect on steel consumers. This is well recognised by those who work in the industry. They have more confidence in their ability to match man for man, skill for skill and manager for manager their counterparts in Europe than appears to be apparent from the Opposition.
The success of the Corporation in securing the Mexican contract in the face of severe international competition is a measure of its technical ability. The Steering Group is one more stage in the logical development of a positive and constructive policy for the industry.
I have said that we put great emphasis on flexibility. The range of 28 million to 36 million ingot tons is not what we have decided capacity shall be in 1980, it is what the Corporation and the Government have decided together to take as the planning framework within which certain important decisions must be taken later this year.

Mr. Michael Foot: If I am anticipating what the hon. Gentleman is about to say, I apologise. Will he now tell us on the basis of what he has said, on the basis of the Government's calculations of what is to be the expansion of the national product, on the basis of the 28 million figure, the figure to which the Government are inclined, what is the estimate of steel imports by 1980 which was the question put by my hon. Friend? I hope that he will give a specific answer.

Mr. Boardman: I am sorry that the hon. Gentleman was not listening earlier. I obviously did not make myself clear, but I did specifically say that the rate of growth taken into this was consistent with what the Chancellor said in his Budget Statement. I am sure the hon. Gentleman does not want me to repeat that. The second part of the question related to imports. Within the framework of 28 million to 36 million tons are a number of factors and a number of variable estimates about imports. The Corporation believes that they will be net gains. I will deal more fully with this in a few moments, and the hon. Gentleman can come back to me if I have not dealt with it to his satisfaction.
I said that the range is one which we decided. We did not decide what the investment ought to be in 1980; it is what we decided to take as the planning framework within which even more decisions were to be made.
It is the market, the demand for steel here, in Europe and overseas, and the price which the Corporation's efficiency allows it to charge which will determine sales. It is this factor, too, which will determine the level of its exports and the level of imports. Capacity plans and demand forecasts will be revised at least annually at the annual investment review, and if our estimates prove, as time goes on, to be too low there will be flexibility to adjust capacity upwards by accelerating investments whether in big schemes or mini-mills and if necessary holding back closures.
We believe that this is the right course rather than, as the hon. Gentleman would have it, "building steelworks in the sky" on the basis of wishful thinking about sales, with all the penalties of under-utilisation, closure of existing major

works, redundancies and so on that might follow if the sales estimates proved too high. It is now up to the Corporation to put forward its plans upon which it has been working while the Steering Group is proceeding to meet the estimated demands and building in the flexibility to take account of changes.
I cannot yet given any indication of what the strategic plan will be. It will be presented later in the year. The role of Government will then be to assess and approve it, keeping regional factors very much in mind.
Many hon. Members will I know be anxious about the effect on the works in their constituencies. I can fully appreciate the anxiety that there may be on the part of some of their constituents. My hon. Friend the Member for Manchester, Withington (Sir R. Cary) mentioned this yesterday, and, as the hon. Gentleman said, a number of hon. Members have seen me and have brought deputations to me from their local industries. I am sorry that I cannot today give hon. Members any answer, nor can I give the deputations any answer. Until the strategic plans are presented by the Corporation I cannot say what are its proposals for any of such plants. It is the role of Government to consider the overall plans when they are presented.
The hon. Gentleman appeared to criticise me for having seen his hon. Friends and my hon. Friends and for seeing deputations unless I was able to give them an answer. It is right when hon. Members have these anxieties and wish to present their case to a Minister with some responsibility that he should be prepared to see them personally. I made clear to each of these that I am not able to give them an answer but I have taken note of the points they make and will make sure that they are in the mind of the Corporation.
It has never been concealed that some reduction in employment will be necessary whatever capacity level is chosen. The object of much of the investment is to replace obsolete labour-intensive plants by the latest techniques.
This was accepted by the Opposition when in government. Indeed, the then Minister of Power, the right hon. Member for Barnsley (Mr. Mason), on the Second


Reading of the Iron and Steel Bill on 8th May, 1969 said:
… optimum use of the industry's resources must involve greater concentration than ever before on very large works exploiting the latest processes".
Later in the same column he said:
We all know that the concentration of the steel industry, like any other, can have social implications"—[OFFICIAL REPORT, 8th M3/, 1969; Vol. 783, c. 682.]
This is common ground. What must be ensured is that BSC has full consultation with the unions and all involved—which it does—and that it makes fair arrangements for all those made redundant—which it does.
There will also be the additional benefit that will be available from the ECSC readaption arrangements, which we propose to negotiate for steel, as well as for coal. It is our own intention to see that those engaged in these industries get the advantages to which they are entitled as a result of the levy that the industry will pay. The Government will, as I have said, have regional factors much in mind in considering the overall investment plans of the BSC.
Let me remind the House of the traumatic experience that this industry went through due to the Labour Opposition.

Mr. Foot: The hon. Gentleman said that he would allow me to raise again the matter of the estimated level of imports of the Government and the British Steel Corporation if he did not deal with it. He must understand that, in particular, those who work in the industry are faced with a very serious situation. The previous target of the Corporation was over 40 million tons. We now have a Government estimate of 28 million tons. We want to know how much of that estimate is steel imports.

Mr. Boardman: I am sure that the hon. Gentleman would like to pick out one figure here and one figure there. The level of exports is no less important than the level of imports. The level of exports, and indeed the level of imports, will depend upon the achievement of an efficient industry and structure, and within the bracket of 28 million to 36 million tons there is flexibility to take account of the various levels of exports and imports.
Let me remind the House of the traumatic experience—[HON. MEMBERS: "Answer the question."]—which the industry went through due to the Labour Opposition. [HON. MEMBERS: "Come off it!"] The Opposition are critical of what the industry is doing. Therefore, I had better make clear the circumstances in which the industry has been placed largely as a consequence of the actions of the Labour Party.
Prior to 1964 the industry was subjected to threats by the Labour Party as to its future—stifling investment and modernisation. Between 1964 and 1967 it was left in a state of grave uncertainty as to how it was to be nationalised—and morale in the industry suffered severely. From 1967 to 1970 the consequence of nationalisation was low investment. The then Labour Government achieved their political aim of nationalising the industry but thereby throttled its plans for modernisation and expansion at a most critical period.
By contrast, let us look at the logical and businesslike approach that has since been applied by this Administration. First, there was a clear decision on the structure of the industry. This was followed by a financial review—the imposition of clear limits, which the Corporation has kept well within, and then by an Act to put its capital structure into a proper shape to face future competition. At the same time, we were making with the BSC the realistic assessment of future demand, to which I have referred. This will be followed by the major strategic decisions on the type and place of the capacity needed to meet such demand.
Throughout these processes the task of investment in modernisation has continued at high levels. Approved expenditure in 1971–72 was £242 million, in 1972–73, £265 million, and in 1973–74, 'on account' with more to follow, £200 million. These are all March, 1971, prices.
Contrast these with the comparable figures under Labour: 1967–68, £86 million; 1968–69, £83 million; 1969–70, for six months, £41 million. It is ironical that the Opposition, whose policies resulted in such low investment for this great industry, should now seek to censure the Government who have aproved investment at three times those levels. It is perhaps a fair comparison between


the confidence we have in the industry, and those employed in it, and the consequences of the Opposition's policy.
Was not the steel industry called by the Leader of the Opposition one of the "commanding heights of the economy"? [HON. MEMBERS: "No."] I cannot believe that he would have missed that one. If he did, he seemed to have no head for heights when he reached the foothills.
The House will also know that, whatever the outcome of the strategic plan, it is envisaged that expenditure during the remainder of this decade will continue at what is, by any standards, a very high level. It is even more unreasonable that the Government should be accused of causing uncertainty by the party that left the industry in a state of suspense for some five years.
Earlier this month I visited the new Anchor Project with the Chairman of the BSC. The impressive progress being made there is a pointer to the exciting future that there is for this industry. It is also a tribute to the spirit and enterprise of those engaged in it—at all levels. I hope that I shall have the Opposition's support in saying that.
Steel is an industry the success of which is fundamental to our economy. My aim—and, of course, the aim of the Government—is to see that we have a strong, efficient and modern steel industry, one that will enable those in the United Kingdom who use its products to be able to compete with those from overseas, an industry that will be profitable, because without profit there cannot at the end of the day be either security for those engaged in the industry, prosperity in the regions, or the growth that the nation needs. My rôle is to see that, within the limits of my powers, the BSC and the private sector have the conditions to enable them to achieve these aims.

Hon. Members: Hon. Members: Resign!

5.9 p.m.

Mr. Frederick Lee: It was not good enough of the Minister for Industry to ignore the very pertinent questions put to him by my hon. Friends on the Front Bench. He told us that McKinsey had advised the Government on this matter. He must appreciate that advice which differs by 8 million tons in 28 million tons is not advice about

an industry. It is like saying that it will either rain or go dark before morning. There just is not anything upon which we can calculate the effects.
By common consent on both sides of the House the consumers of steel in the last few years have been through an extremely difficult time. In consequence, the industry has not been producing to anything like capacity. Despite that, it is now running at 27 million tons. How does the hon. Gentleman expect my colleagues on this side of the House, or the nation, to believe that the Government are sincere in wanting to see a huge expansion of the economy when they tell us that a steel industry of the present size is all that will be required until 1980? We cannot begin to calculate the future of this vital industry, which is the genesis of so much other production, on that rather stupid figure. I am surprised that the firm of McKinsey should associate itself with a margin of 8 million tons which can only bring it to ridicule in the eyes of other advisers. We are entitled to expect far more from the hon. Gentleman in answer to the questions we have asked than we have heard so far.
Under what provisions of the Act has this review body been brought into existence? The powers of Governments over nationalised industries are limited. I had something to do with the Act and I know of no provision in it which gives the Government power to hold up planning in nationalised industries for the best part of two years while they play about with review bodies.
While all this is going on we are told that there is a shortage of capital. To take the first three years which the hon. Gentleman mentioned, how can the BSC begin investing in a big way when the planning has not even begun? During the Labour Administration there was no period when the BSC was starved for capital—and I challenge the hon. Gentleman on this. That is the answer to the comparison made by the hon. Gentleman of the amount of capital available under Labour and Conservative Governments.
The following words appear in the Amendment:
…thus able to provide greater security of employment and to make its full contribution


to an expanding economy both regionally and nationally.
The North-West Region is being deliberately run down. Not one announcement of capital investment has been made. We have seen work go from Trafford Park and Openshaw, and my hon. and learned Friend the Member for Warrington (Mr. W. T. Williams) has seen work go from his area, and there has not been a single announcement of investment in the North-West. It may be that if the headquarters of certain divisions are in other parts of the country it is easier to take a long view in the North-West and decide to close down there.
In previous debates I have mentioned Irlam and the problems which arise in the North-West if Irlam goes. Since I last addressed the House, phase 1 of the Irlam Steel Works closure has taken place and 1,960 jobs have been lost. There were negotiations with the trade unions and the trade unions finally accepted this. It will be remembered that the reason given for the suggested closure of Irlam was obsolete equipment. This was decided without investigation. The system seems to be first to announce the closure and then do the investigating. Phase 2 of the Irlam Steel Works closure may come into operation next month when another 2,400 jobs will be lost. I am not asking for charity from Lord Melchett, the hon. Gentleman or anybody else.
We were told that Irlam would close on the basis of it being obsolete. We have accepted phase 1 of the closure and most of the obsolete plant has gone. Irlam is therefore now highly profitable. Irlam having accomplished that, the BSC has twisted the argument and has said that there is not enough raw material in the North-West. In other words, the steel scrap upon which the electric arcs are fed is now more important than the ores. We made investigations into that and we can provide every ounce of steel scrap that two electric arcs could consume in the Irlam Works. We are profitable whether or not we get electric arcs. The profitability is running at a rate of £1·3 million per annum. To that must be added the £1½ million profit from the rod mill, which is a modern mill. How is it possible to close down such a profitable venture? We have made an assessment

of the requirements for new plant if we are to have electric arcs. To install two electric arcs would cost £5·14 million. The installation of those two electric arcs would mean a profitability of between £4½ million and £5 million per year.
What else must we do? We did not like it, but we accepted the phase 1 rundown of obsolete plant. Having got rid of that, we are now profitable, and we are fighting for the retention of the 2,400 jobs which will be lost under phase 2. I challenge contradiction either from the Government Bench or from Lord Melchett that we are now one of the most profitable adjuncts within the BSC. With two more electric arcs our profitability will be very much higher even than it is now.
Hon. Members who come from the North-West, irrespective of politics, are deeply concerned about this issue. I have never known an issue on which there was such unanimity on both sides of the House. We base ourselves not on sloppy sentimentality but on sheer economic facts. We just shall not be quiet if in June there is an announcement that phase 2 will be put into operation. We shall fight it. I have tried to show that on two of the main counts Irlam should live. We were once told that billets would be far more cheaply made at Scunthorpe than at Irlam.
We have gone into the matter in great detail. It means that first the steel scrap has to be dragged from the North-West over the Pennines to Scunthorpe to be made into billets which are then dragged back over the Pennines into Irlam. This is the economics of Bedlam. The Steel Corporation figures which were first issued tended to show a great cost difference in favour of Scunthorpe against what we could do at Irlam. Again, we have carried out a good deal of investigation. We estimate that, taking into account the cost of taking the scrap from the North-West to Scunthorpe and bringing back the billets—and it must be remembered that average capacity in the steel industry is about 70 per cent. not 100 per cent.—the cost of those billets from Scunthorpe would be £39.28 against the Irlam price of £37·22.

Mr. Eddie Griffiths: Would my right hon. Friend take it from me that the chances of scrap


metal being taken from the North-West to Scunthorpe will be infinitesimal?

Mr. Lee: No, I will not take it from my hon. Friend. The BSC tried this on us and we made sure by approaching the scrap merchants. They have assured us that they can provide every ounce needed for the two electric arcs in Irlam and that that would be available to make the same kind of billet in Scunthorpe. I am arguing the economic case for Irlam and I shall continue to argue it. On any grounds we regard this as an economic proposition.
Unfortunately, in some ways we have been misled by the BSC. My colleagues in the trade unions in Irlam were told in discussions with Mr. Morley that no announcement would be made until June, 1972. In fact there have been many announcements concerning electric arcs going into some steel-making plants in Britain. My hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) may like to know that one plant was resuscitated from the dead, although it will be a loss-maker for five years while we make profits. In these circumstances, we are entitled to say that Irlam must be kept alive.
During the recent coal strike the Irlam works was one of the few steel plants which could be kept at 100 per cent. capacity because ample electric supplies were available locally. In the last few months natural gas was piped to Irlam from the North Sea. There is not one count on which the BSC can point to any shortage of energy supply or raw materials, or any lack of profitability or men available to work—and these men have worked all their lives in this industry in Irlam. All these factors are present in Irlam.
Hon. Members on both sides of the House have met deputations made up of very fine men from the area, men who have been constructive and who have come to the House to discuss matters with us. The leaders of these deputations have got out extremely reliable figures and we have become completely convinced that it would be a great tragedy to lose steel-making capacity in the North-West. This would leave the area of the North-West, an area of enormous engineering production, without any of its raw material, with thou-

sands of able steel-makers cooling their heels while billets are brought in over the Pennines. What kind of men do they think we are? I was once a shop steward and I doubt if I would have stood for this kind of thing.
The weakness of the situation is that the level has been allowed to fall from a figure of 42 million tons, which is what the British Steel Corporation should be able to produce. Once that sort of figure is achieved, all the theoretical questions about green field sites and brown field sites fall into place. I advocated a green field site within the 42 million ton figure—and why not? This will be done in competition with Japan, the United States and Germany, but it does not mean that we should close medium-sized firms. The large green field sites were to be used mainly for export orders, and one has them on estuaries and coasts. There has since been a great deal of thought about these matters and learned authors have expressed doubts about investing such large sums in these huge sites—and no doubt this is one of the arguments that is taking place in the review body.
We now face the "crunch". I wrote to Lord Melchett a month ago asking for a meeting with the Corporation, including Members on both sides of the House, one or two members of the Irlam Council and the Works Action Committee. I had an acknowledgment of my letter on 20th April and I heard nothing since. This is not the way to treat Members of this House. I do not doubt that, in view of what has been going on between the BSC and the Government, there are reasons for his not wishing to meet us, but I do not like being treated in this way, nor do my constituents in Irlam.
I believe we have made our case and I demand that the Irlam Works should be kept open.

5.29 p.m.

Sir Anthony Meyer: The right hon. Member for Newton (Mr. Frederick Lee) put forward a powerful plea on behalf of Irlam. However, the part of his speech which was most convincing was at odds with the main thesis which surrounded it—namely, a criticism of the Government's decision to go for a less ambitious target than that which the


BSC was thought originally to be aiming at. This is the point to which I shall devote the first part of a brief speech.
I do not understand all the fuss which the Opposition are making over the steady sustainable expansion announced last week by my hon. Friend in his statement. I should have thought that the party opposite would have had painful memories of what is involved in proclaiming almost unattainable objectives as though they were firm elements of Government policy. I should have thought that merely to mention the two words "National Plan" would have induced right hon. and hon. Members opposite to take a rather more realistic look at the possibilities of industrial expansion for the future. Surely it is far better to aim at what we can be sure of achieving on the basis of a realistic estimate of what the British steel industry can accomplish.
If the consequences of aiming at a lower target are that we find ourselves in 10 years or so a net importer of steel, surely that is a better outcome than finding ourselves vainly seeking to export to a glutted world steel market steel production which we are sustaining with resources far better devoted to other more profitable uses. To talk as if the maintenance of a large steel industry, irrespective of the number of jobs that it provides, was the prime object of policy appears to me to be complete moonshine.
Whose interests are furthered by arguing for the creation of massive new projects involving thousands of well-paid jobs for workers as yet non-existent on sites as yet to be specified? As the debate goes on, I suspect that we shall find one hon. Member after another rising to argue the case, as the right hon. Member for Newtown has, for the retention and improvement of existing works, and that mere lip-service will be paid to the importance of creating some grandiose new project.
In practice, we all know that if the Government were to go for some grandiose green field site—I sometimes think that the expression "Elysian field" might be a more suitable title for such a project—its net effect over the years would be that it would become a prestige project, possibly a white elephant, and

certainly one which would suck away available resources from existing projects, many of which need a further injection of capital to keep them viable. I for one will rejoice if it emerges eventually that the plan is to concentrate on improving existing plants rather than seeking to create a very large new one.
We have to face the fact that there may be certain existing plants which are so badly sited, so antiquated and with such a legacy of bad labour relations that it becomes necessary gradually to run them down. There may be such plants, though I am sure that none of us will name any——

Mr. Donald Coleman: Is not the hon. Gentleman aware that the steel industry enjoys the finest industrial relations in the country?

Mr. John Mendelson: What is this man talking about?

Sir A. Meyer: I am not sure that that intervention calls for any answer. I said that there may be such plants but that I doubted whether any of us would name them. I am saying that the vast majority of plants operating today are well placed to expand, and I have no doubt that our debate will demonstrate this, as the right hon. Member for Newton has done.
In practice, this kind of expansion is more likely to come about within the framework of the realistic objective set by the Government than in a more grandiose approach. I believe that we should invest in people and not in pipe dreams.
Among the plants which are best qualified to benefit from a realistic policy of sustainable expansion, none is better qualified than the Shotton works in East Flintshire. The North Wales TUC Advisory Committee recently commissioned a report by P. W. Roberts on the future of the Shotton plant and its relation to the economy of the North-West, Merseyside and North Wales. It is a very well argued and deeply thought out document, though I cannot pretend to agree with every word of it. It is based largely on the assessment for requiring a major new green field or brown field site and it is partly an argument for a vast expansion of Shotton within the context of the larger target which the Government have not accepted. But as one reads this


very thorough and well-argued document, what emerges much more strongly than the argument for a new brown field site is the possibility, desirability, indeed the necessity for balanced expansion at Shot-ton itself within the context of the realistic approach which is advocated by the Government.
Productivity at Shotton is higher than the BSC national average, despite the fact that it is still requiring further investment on the steel-making side. If we can get that further investment, there is no doubt that Shotton will be able to exceed the average of the Strip Mills Division of the BSC. This high rate of productivity at Shotton is no flash in the pan. There has been a long record of profitable operation at this works dating back to the days before nationalisation.
I hope that other hon. Members will develop further the case for the expansion of Shotton——

Mr. Barry Jones: Hear, hear.

Sir A. Meyer: It rests purely on arguments internal to the steel industry itself. But when other considerations are brought in the case becomes overwhelming. Yesterday, we debated the Government's Industry Bill. Had I succeeded in catching Mr. Speaker's eye in that debate I should have welcomed the proposals in that Bill. I believe that they are necessary. However the Bill does not constitute so sharp an instrument for bringing employment and prosperity to any region as that which is provided by the opportunity which is available through large investment in specific projects such as the Shotton works.
Once one accepts, as I do, the necessity for Government intervention to provide a high level of employment, the problem is how most effectively that intervention can be exercised. It seems to me that large investment in specific projects where the opportunity for it is available is the most effective way of doing it.
In 1970–71 the sum of £6·5 million has been spent on providing new coke ovens at Shotton. As the report says, if this is not the prelude to balanced expansion of the works as a whole it raises serious problems of public accountability. It has been calculated that for

an investment of £50 million the works at Shotton could be expanded in such a way as to produce balanced expansion of the works—steel-making and finishing together—and that £50 million would include expenditure on an ore terminal at Birkenhead. That seems to be a cheap price to pay for a development which could produce balanced expansion throughout the whole area of Merseyside and North Wales and a spin-off in industrial employment in an area which is unhealthily vulnerable in that three employers alone dominate the scene in the provision of jobs in the area.
I hope that the realistic target which the Government have set indicates that they intend to concentrate on the development of that works which can be expanded profitably. On that ground, I heartily endorse the proposals which have been announced by the Government.

5.40 p.m.

Mr. Gregor Mackenzie: If the speech of the hon. Member far Flint, West (Sir A. Meyer) is typical of the sort of speech that we are to hear from the Government benches, and if those are the kind of thoughts which are to influence the Government, it is a pretty bleak outlook for the steel industry in Scotland, Wales and, indeed, England.
I took strong exception—as I am sure many of my hon. Friends did—to the hon. Gentleman's comments about industrial relations in the steel industry. I come from a part of the world which has a record of industrial relations second to none. I know that my hon. Friends from Wales will want to deal with the points made by the hon. Gentleman in this respect, and I hope that they will have an opportunity to do so.
I now propose to do something which the hon. Gentleman says we ought not to do. I propose to make an appeal for the retention of steelworks in Scotland. The hon. Gentleman talked about hon. Members making a series of area speeches. In my view that is what Parliament is all about. I am here to speak for the 20,000-plus who work in steelworks in Scotland. It is my task to ensure that their jobs stay there and, indeed, increase in number over the years. I hope that the lion. Gentleman's speech will not influence the Government.
The Minister's speech today, and particularly the last few minutes of it, may have pleased his hon. Friends. It may be that his way of approaching these debates is to score points off the Opposition if that is possible. I remember the hon. Gentleman when he was on the back benches. He was an industrious supporter of his Front Bench. He made many debating points, and I am sure that that is what he regarded as his function as a back-bench supporter of his Government.
His speech today was not worthy of a Minister who is supposed to be concerned about the jobs of thousands of steelworkers. When we are fighting for jobs in the industry we do not want schoolboy debating speeches. We want serious speeches which provide answers to the questions being asked by the people in our constituencies. I am glad to see the Minister of State for Wales nodding agreement with my comment that the last part of his hon. Friend's speech——

The Minister of State, Welsh Office (Mr. David Gibson-Watt): I thought that my hon. Friend made an extremely good speech.

Mr. Mackenzie: I hope that the Minister and the people of Wales will read it.
People in Scotland were particularly disappointed when the Minister made his statement in the House a few weeks ago. There were two reasons for our disappointment, and I make no apology, certainly not to the hon. Member for Flint, West, for saying so. We wanted to hear specifically what was to happen to the steelworks in our constituencies. It is not good enough for a Minister to stand at the Dispatch Box and say that matters relating to the areas which we represent are matters for the British Steel Corporation to decide, particularly when they relate to thousands of jobs in my constituency and in constituencies such as Motherwell, and others. We expect the Minister to take a hand with the British Steel Corporation in ensuring that regional considerations are borne in mind.
I was very disappointed when, some weeks ago, the Prime Minister wrote to me and said that the issues I had raised were matters of detail for decision by the British Steel Corporation. In my view

these considerations ought to be fitted into the whole regional, economic and social planning of the Government. I see the British Steel Corporation as an important arm of the Government in this regard. One of the hopes that I had for the nationalisation of the industry was that the Government would use it to stimulate growth and provide employment in the constituencies. I hope, therefore, that the Minister will look seriously at what we are told are the BSC's hopes for the industry as a whole and will adopt the higher target which he mentioned rather than that which appears to be contemplated of 28 million tons.
One thing which concerns us in my part of the world is that we cannot plan ahead because we do not know whether we are to have a substantial green field development. Until such time as we know that the Government themselves and their executive arms in the county councils cannot plan ahead for the infrastructure that would be required.
I hope that when the Minister replies to the debate he will say something about Hunterston. My hon. Friend the Member for Chesterfield (Mr. Varley) said that a statement had been made by the Secretary of State for Trade and Industry to the Scottish Conservative Party Conference. What was important was that at a time when the Secretary of State was making his comments about Hunterston and the future of the Scottish steel industry the Prime Minister seemed to be saying something completely different, and that was naturally upsetting to those concerned with the future of Scottish steel.
We have been waiting a long time to know what is to happen at Hunterston. I remember taking part in a debate on this subject as long ago as. I think, 1968. We were told by the then Opposition that they had plans ready for when they became the Government and that they knew precisely what they would do in that event. That was said some years ago, and naturally the people in my part of the world want to know whether they are to have this development, and, if they are, how it will affect the Scottish steel industry in Lanarkshire and elsewhere.
I shall not rehearse all the arguments in favour of the Hunterston project. They have been rehearsed on numerous occasions in the House. Suffice it to say that


we believe Hunterston could play an important part in the future development of the industry not only in Scotland, but in the United Kingdom as a whole. I say that bearing in mind that I represent a steel constituency. Over the years people have been aware that if they were fortunate enough to get the development at Hunterston it would involve their moving from Lanarkshire to jobs on the coast. They are conscious of that possible effect, and they are therefore anxious to discover what is to happen. They are concerned about the locational changes, but they believe that this development would be in the best interests of the industry as a whole.
How does the Minister see the future of the Lanarkshire steel industry? Notwithstanding any green field development that might take place, we want to know what is to be the future of Clydebridge and other Scottish steelworks. We have excellent steel rolling and finishing capacity. We have the men with the skills for steel making, and we have the capacity. We want to be assured that this capacity will be retained in Scotland and brought up to standard. We want to be assured, too, that steel will not be sent to Scotland from abroad or from the Midlands merely to be finished in Scottish steel mills.
I say that because not many months ago the iron works in my constituency were faced with the prospect of having iron brought up from the Midlands to be finished in Scotland. I know that my English colleagues will appreciate that such an arrangement can mean redundancy for hundreds of people in the iron works and so I objected strongly. We would like to be assured that we shall not find ourselves in a similar position with regard to steel making. If anyone in the BSC tries this on we shall object strongly.
A second assurance that I should like from the Minister is on a matter vital to the future of the constituency I represent. The Minister did not mention it today or in his previous statement. We should like to hear about how he sees the future of special steels. In my constituency and that of my hon. Friend the Member for Motherwell (Mr. Lawson) we have special steel plants, at Hallside and Craigneuk. If the Minister is concerned about them, I would mention that they

are profitable. They have an excellent production record. The people employed there have made a substantial contribution to the economy of Lanarkshire over some years. But nothing has been said about them over the past few months by either the Minister or his colleagues. It is natural that we should like to have sorted out the rumours being floated around about closures.
The second reason why we were disappointed in Lanarkshire, apart from the lack of detail, was the fact that the Government's objective in tonnage terms was far below that which we think is necessary to guarantee the future security of our steel works. I am glad to see in the Chamber the Under-Secretary of State for Home Affairs and Agriculture, Scottish Office. We have heard one of his colleagues speaking in terms of the future of Scottish steel being 4½ million tons by 1975 and obviously a very much greater figure by 1980. But with the figures of 28 million to 36 million tons being bandied about, the 4½ million tons by 1975 and more by 1980 seems a dim and distant prospect, especially if the industry's total capacity is to be as low as it is. This is something which ought to give all of us cause for concern, especially when we read today's edition of The Times and see reports of how Britain now stands compared with other countries in the league for steel production. What we in Scotland are asking for may seem fairly small beer, albeit it provides thousands of jobs which we want to keep.
Finally, we spent all of yesterday talking about regional development. I am not sure that the Industry Bill got the same kind of welcome from some of the Minister's hon. Friends at it received from my hon. Friends—especially as the hon. Member for Oswestry (Mr. Biffen) is in the Chamber. But my right hon. and hon. Friends gave a qualified welcome to that Bill about regional incentives. We shall have to wait to see how many jobs such Bills ultimately produce.
I am naturally anxious to encourage new jobs into Lanarkshire and Scotland. I said that in 1970 and I make no apology for repeating it. But, at the same time, I hope that the Government will appreciate that the men who have given their skills and talents over a long period to some of our older industries should not be neglected. It is all very


well talking about electronics industries and all sorts of newer types of development; but there is no harm in doing for the steel industry what the Government have been obliged to do recently for shipbuilding. If that does not happen, there will be a poor outlook for Scottish steel workers.
I mention this not just because I represent a constituency which has many steel workers. I have a family interest in it, as have many of my hon. Friends. Many of us are sons or relatives of steel workers. My father-in-law worked in the steelworks from the age of 14 until he was declared redundant at the age of 55. He worked in one steelworks for 41 years. Pre-nationalisation, the works were closed. There was no golden handshake; nothing. He simply went out on the street at the age of 55. In Scotland at that time, pre-1964, just as today, trying to find a job was like looking for a needle in a haystack. It was a bleak outlook for him.
That is the sort of feeling that is gradually creeping into Scottish steel constituencies again. They have the depressing thought of not knowing their future. Nothing that the Minister has said today has given any confidence for the future. We in Scotland hope that the Minister will raise his sights a little, realise that there are great prospects for the steel industry and try to keep the targets as high as possible. We in Scotland want no more and no less than our full share in order that the men who have given their lives to the Steel Industry can have their just rewards.

5.55 p.m.

Sir Robert Cary: I shall be brief. I agree entirely with the hon. Member for Rutherglen (Mr. Gregor Mackenzie) that the main pre-occupation of backbenchers on both sides of the House is the future of steel plants within their areas. By that much, the debate is a regional debate.
I have listened sympathetically to what the hon. Member for Rutherglen has said about his beloved Lanarkshire. I, too, have the same pre-occupation in my county, Lancashire. Before I come to that matter, and in support of what was said by the right hon. Member for Newton (Mr. Frederick Lee), I should

like to thank my hon. Friend the Minister for Industry for what he said today about a question I put to him during yesterday's debate. Although he was not in charge of yesterday's debate, it inspired him to give me a gentle answer today, in the hope that he can be more precise and profound in time to come. My hon. Friend the Minister gave a commendable performance at the Dispatch Box today in spite of jeers thrown at him from elsewhere, just as he was confident in the difficult task he had to discharge on 8th May. I wish him well for the future—but not in the hope that I can bribe him vis-à-vis Irlam.
All that has been said in the debate by the right hon. Member for Newton and on previous occasions when he has intervened so vigorously and forcibly in the interest of the Irlam steel plant, has been said also by my hon. Friend the Member for Stretford (Mr. Churchill), who is now even closer to that plant than I am. My association comes from pre-war days. I have almost a paternal affecting for the property.
I hope that something will transpire from this. My hon. Friend the Minister will understand that in spite of his opinion, which I appreciate, and his constant willingness to listen to the views of hon. Members on both sides of the House, I ask him to forgive us, in our turn, if there is much reiteration—what the late Aneurin Bevan used to call "acres of boredom". Therefore, I beg him to take under his wing as far as he can the whole problem of the regional impact of steel plants. I shall come to that point later.
In support of the right hon. Member for Newton, the campaign to save a part of Irlam is as vigorous as ever. The right hon. Member named only one part of it, which will employ, I hope, about 2,000 men. The site has many advantages. Raw materials are readily available, including scrap. There are no interest charges on Irlam and even for the electric arc furnaces such charges will be absolutely minimal.
I think I am right in saying that no other plant has such a wealth of raw materials and customer demand on its doorstep. That is important as it eliminates an immense amount of transport which is so costly. By the installation of two electronic arc furnaces at a cost


of £5·14 million, profits at Irlam could range from £4·5 million to £5 million in one year. I ask the British Steel Corporation where within its responsibility can such a return be shown on a year's work?

Sir Gerald Nabarro: When I spoke at Irlam a few months ago it was evident that the great majority of local people favour, as an alternative to closure, a scheme for hiving off the Irlam works and selling them back to private enterprise. That is a perfectly possible exercise. Why does not my Lord Melchett consider a proposition of that kind?

Sir R. Cary: I am grateful to my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro). I had almost reached that point. Such a scheme would require the general support of all those who have some concern with Irlam, including, of course, the right hon. Member for Newton.
As my hon. Friend has pointed out, if a private person were allowed to raise the necessary capital and given the collateral indicated in paragraph 17 of the Industrial and Regional Development White Paper, one half of Irlam could survive employing 2,000 men, particularly if the wire works were transferred to its control. However, that would be a private operation and perhaps unacceptable both to the Government and the British Steel Corporation.

Sir G. Nabarro: Sir G. Nabarro: Why?

Sir R. Cary: It may be. They have been known to refuse in the past. They have some capacity to refuse again, but I hope in this case they will not do so. However, if that is unacceptable, could Irlam be named as an integrated plant under the British Steel Corporation? That would ensure a working future for the surviving part of the plant which employs several thousand men. That again would be acceptable to the people of Irlam who would not be literally murdered but would suffer disastrously if the complete closure took place.
If those two paths are not followed in the immediate future—as the right hon. Gentleman the Member for Newton pointed out, the limiting date is somewhere in the middle of June, and it is desperately urgent—then the answer for Irlam may be rather sad and sinister.
What is happening in the world of steel and what is its future? On 8th May my hon. Friend talked about the completion of strategic planning, yet there seems to be some part to be played by the smaller units. Why is it that twenty years ago in strategic planning the United States went for the big units and are now—

Mr. T. H. H. Skeet: Smaller units.

Sir R. Cary: Yes, they are breaking up the big units and fragmenting them throughout the length and breadth of their great continent. Are we to follow the United States and destroy so much that is good within our own contituency provinces only to see our successors trying to bring back that which we so thoughtlessly gave away?
The answer is obvious. The Government through the excellent measure they announced yesterday can do many salvage operations. Paragraph 17 in that White Paper is the answer. The Government can use their power both for coal and steel. I ask my hon. Friend to do what he can to salvage one part of the Irlam plant.

6.5 p.m.

Mr. Roy Hughes: I admire the fight the hon. Member for Manchester, Withington (Sir R. Cary) and his other colleagues are putting up to retain the Irlam works. I much admire the way they put forward their case. I see nothing wrong in making a fight for works in one's own area.
We had the statement from the Minister for Industry of 8th May and I suppose that this debate is an inquest upon it. However, it was something of a non event despite a full month's delay.
The statement talked of investment development from 1970–71 to 1973–74. Of course, the period 1970–71 has gone past us by quite some time so that is nebulous in itself. The statement spoke of a £90 million investment at the Spencer Works at Llanwern. I give that example because those works are on my doorstep. I know too that the bulk of that investment was authorised by the Labour Government two and a half years ago. The increase is partly the result of inflation and partly the result of the


hold-up by the Government of that major development scheme.
That illustrates the bogus pretentions of the Government's statement but it does not alter the fact that the Spencer Works is now at a distinct competitive disadvantage. The Spencer Works is not in a development area and the BSC has taken a decision to transport its iron ore from the terminal 60 miles away at Port Talbot. These great works should not be treated in this way. The Government should remove the development area anomaly in South-East Wales and make better arrangements with the co-operation of the BSC for its supply of iron ore at a much nearer location.
The statement speaks of a target range of between 28 million and 36 million ingot tons. That again is vague. It is certainly the height of irony to suggest that the BSC agrees with these target figures. What cannot be denied is that the BSC has been planning for some considerable time a target of 35 million tons by 1975 and over 40 million tons by 1981. Lord Melchett almost openly proclaimed, at least in a room in this House, some two years ago that these were the figures on which the Steel Corporation was working. Has Lord Melchett changed his mind, or has it been changed for him? Perhaps his views have been modified due to his allegiance to the EEC. I know that he has been resentful of Government interference in the affairs of the Steel Corporation. He has also complained, not without justification, if I may say so, about the lack of commercial freedom. The Steel Corporation has not been allowed to put up its prices when the markets have been buoyant and yet at the end of the day it has been expected to show a profit and reasonable results.
Lord Melchett in opting for the European Coal and Steel Community is exchanging a lion for a tiger. We already see in the statement the blighting hand of the EEC. It is difficult to understand the position of the steel workers' trade union. It was apparently in favour of British entry into the Common Market. In fact, it was one of the few British trade unions which took that decision. However, in view of what is now happening, it cannot say that it was not

warned. It is now becoming obvious—speaking in language which the union will understand—that it has been sold a pup.
The setting of this low target of 28 million tons is an open invitation to our competitors to construct extra capacity and to ensure that our maximum target of 36 million tons is not reached. We could have a flood of continental imports and our own steel workers languishing on the dole.
The Guardian of 7th May, in an article by Victor Keegan, the Industrial Correspondent, pointed out that the previous day Lord Melchett had said that the statement of the Minister would make no difference to the plans of the Corporation to rationalise its labour force. That means that by 1975 the labour force will be cut by no fewer than 50,000 people.
What does this mean in steel areas like Scotland, Tees-side, Cumberland and Wales, all of which are already areas of high unemployment? Let us consider the position of the great Ebbw Vale steel works in Monmouthshire. I do not wish to transgress on the area so ably represented by my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot)—I know how he has pursued the case for this steel works over the years —but if the investment earlier proposed for it does not go ahead there will be a catastrophic unemployment situation in North Monmouthshire.
Finally, I turn to the works to which I referred earlier when my hon. Friend the Member for Chesterfield (Mr. Varley) opened the debate, the tube works at Newport, which the Steel Corporation is proposing to close. I have already pointed out that it has been a highly profitable works over the years. It occupies an excellent site with easy access to the main motorways to the South-East and the Midlands, a main line railway station and some thriving docks. We are told that the proposed closure was a commercial decision by the British Steel Corporation. I find it difficult to believe that in view of the record of that works.
It has seemed to me for a very long time that the voice of Wales in the Cabinet is very muted. It also seems that the voice of Wales in the British Steel Corporation is not very strong. Why


does not the Minister intervene to prevent this unjust closure? The Government say that it is the result of a commercial decision by the Corporation. We are not asking for charity. This works has fully justified its existence over many years. Surely the Government realise that they cannot go on putting people out of work. That is what the Industry Bill yesterday was all about.

6.14 p.m.

Mr. Patrick McNair-Wilson: I have every sympathy with the views expressed by the hon. Member for Newport (Mr. Roy Hughes) and other hon. Members representing steel constituencies. It is natural that they should want to see a big development of plants in their areas. This is a wholly sensible point for them to put here today.
Everybody wants a strong steel industry, and in order to get it we must ask ourselves some pretty hard questions. In my few remarks I should like to face some of the facts which have to be faced if we are to achieve that situation. The first is that, whether we like it or not, the British Steel Corporation, unlike all the other nationalised industries, is not a public utility. It is a manufacturing industry subject to all the competition of imports and strictures which affect other manufacturing industries. Therefore, when we tend to discuss the British Steel Corporation as a nationalised industry, assuming it is a public utility rather like some of its colleagues, we are quite wrong.
The next point is that over the recent past three has been a world recession in steel. It is 9 per cent. down in Germany and the United States. In the papers today we will have seen the International Iron and Steel Institute showing a world growth which is beginning to turn the corner of about 2 to 2½ per cent. over 1971. However, it would be a rash person who was prepared to take those figures and say that they represent a great upswing in demand for steel. My hon. Friend the Minister for Industry in his excellent speech mentioned the alternative materials which are presenting themselves. We must take that comment into account, too.
The next point in looking at the problems of the British Steel Corporation is

that it will always be subject to Government intervention. A simplistic view often expressed in this House when we talk about the nationalised industries is that at one moment we want them to operate as totally commercial enterprises and at the next moment, since they are nationalised, we have a debate to decide what they should be doing next. Looking at the series of debates which we have had on the coal and other industries, I am surprised that they have survived so long. The problem with a nationalised industry is that we have a permanent shareholders' meeting five days a week for six months of the year in London, S.W.1, deciding what should happen to that industry, and on top we have Ministers. Therefore, while Lord Melchett is right in his comments about wishing to see less Government intervention, the fact that it is a nationalised industry means that, however much he may wish to find himself in that situation, he never will, because nationalisation means Government interference whether we like it or not. I do not like it.
Another element is that even in this country the British Steel Corporation is not totally monopolistic. The British Iron and Steel Producers' Association represents a spur of competition.

Mr. Skeet: Thank goodness.

Mr. McNair-Wilson: But even in areas where the industry is in a totally commanding position, that position is eroded by another factor. For example, the British Steel Corporation is responsible for over 90 per cent. of the market in tinplate and heavy rails. Yet we find that the Corporation relies on three or four customers in those areas for its total sales. Therefore, its ability to be flexible in pricing, and so on, is largely removed.
I turn next to the problem of imports generally as they affect the industry. There has been a striking reduction in import restrictions for the British steel industry over the last 15 years. Now, with the Kennedy Round, we find ourselves with an 8 per cent. protection. That will disappear when we go into Europe. We will then have removed almost all the barriers which could protect British steel against imported steel. That situation has not happened suddenly. It has been happening over a period. I have the actual figures. In 1957 we had a 25


per cent. to 33 per cent. protection through tariffs. That is now down to 8 per cent., or one-quarter, after 15 years. When we go into Europe that 8 per cent. will disappear altogether.
Another effect of going into Europe will be that the British Steel Corporation will no longer be the predominant steel producer in a market in which it controls two-thirds of the supply. It will become merely a largish steel producer in competition with other groups of a very similar size. I can give an example of this. For 1980, BSC production has been predicted at between 28 million tons and 36 million tons. But Thyssen-Mannesman-Krupp, one of the big steel companies in Germany, has forecast production for that period of 30 million tons. So the British Steel Corporation has no special importance because of its size. It will be merely one of a number of big units in the European Communities.
I would like to leave that aspect for a moment and deal with one other point and then perhaps tie the two together. There is other competition apart from Europe. It is true that steel demand has been increasing over the past two decades by roughly 100 million tons every five years, and more recently it has increased faster. But more countries are making steel—not only the Europeans but many other countries. In 1938, 20 countries apart from the big producers—the United Kingdom, Japan, Germany, the USSR and so on—were producing steel finished products. This number rose by 1972 to 70 but the capacity, which is the worrying aspect, and which in 1956 was 40 million tons, increased by 1970 to 140 million tons.
So we are worried not only about competition from the giants. We know about them. More and more countries throughout the world are producing steel, however, and as a nation we will find it more and more difficult to sell into those markets because of the tough local competition on the one hand and the tariff barriers that will be put up by the small producers to protect their investment on the other hand. This sets the scene of the problems the BSC will have to face.

Mr. Ted Leadbitter: Against the background of the hon. Member's thesis that there has to be Govern-

ment intervention, and in view of his comments on competition, if I could show him a list of extensive closures of BSC plants in Wales, England and Scotland, earmarked for the period until 1978, would he indicate whether he agrees that steel constituency Members should get together and ask the Government to explain the list and also tackle the BSC, which has not denied its existence?

Mr. McNair-Wilson: I am very sympathetic to that view and I know the hon. Gentleman's interest in the subject. We have discussed it before. There is a duty here to explain to the people in the industry what their future is. But I would not propose to go quite to the point the hon. Member has suggested. One of the reasons why the coal industry got into such trouble was the artificial targets which were set. The target started at 200 million tons a year and was gradually reduced. We could be in the same danger with the steel industry.

Mr. Leadbitter: Mr. Leadbitter  rose——

Mr. McNair-Wilson: I do not want the lion. Member to intervene again unless he particularly wants to do so. I would agree that the steel workers have a right to know about their future.

Mr. Leadbitter: Will the hon. Member bear in mind what my right hon. Friend the Member for Newton (Mr. Frederick Lee) said about Irlam which, in the list to which I was referring, is set down for closure in 1974? In view of the arguments put forward in the House, the existence of the list and the numbers of people who will be put out of work, would not the hon. Member agree that it is Parliament's duty and the duty of hon. Members who represent steel constituencies to approach the Minister at the earliest opportunity to examine the list and to examine the forward planning of the Corporation?

Mr. McNair-Wilson: I am not disputing that. We remember with the coal industry that those pits which were to be closed were on a graded basis, and discussion took place upon this. I have just made clear that I feel that workers in the industry have a right to know what their future will be.
The point I am making concerns the problems which the industry has to face,


apart from the competition from the very small producers. Of course there are the intermediate producers which are not in the big league—countries like Sweden and Australia. Australia has some fairly large production and there are other countries whose competition will become stronger as time passes.
In this country we should be very careful before we set our sights upon a course which is merely following limply behind the Japanese towards great units. We have to bring many of our existing plants up to date. Irlam was mentioned a moment ago. The blast furnaces there were given to this country as reparations by the Germans after the last war, so a major investment operation is required on the existing plant.
There is one point I would make to the hon. Member for Chesterfield (Mr. Varley). When considering the investment programme of the Corporation he should realise that the Government are authorising three times more investment than the Labour Government authorised when they were in power. In 1968–69 they were spending £83 million but in 1971–72 we are spending £242 million. This is substantial investment and it is running at the highest level the industry has ever seen.
The target has been set at 28 to 36 million tons, but why has it been set out like this? The Benson Committee suggested a target for 1975 of 32 million tons. But since the time of the Benson Committee—and we have to face this fact—the question has arisen of our joining the EEC.
I believe that the benefits from joining the EEC will far outweigh the problems that will arise. One problem which arises, and it is no secret, is the rule of the ECSC that no enterprise shall possess more than 13 per cent. of any product which it may make or sell without reference to the Commission. We are already in a very difficult position because we are well over the top with tinplate production. The Commission will have the problem of pegging the tinplate production figure, but whether it is prepared to allow many new plant capacities to go on-stream is somewhat problematical. This could have a serious effect on Scotland. Hunterston has deep water and all the advantages one would expect from the classic green field site. But we

could find ourselves in the situation that the British Steel Corporation as a single unit would be prevented from producing a lot more capacity because of the ECSC rule.
Would my hon. Friend the Minister consider that in Scotland we might have a BP kind of solution, or a private enterprise solution, perhaps based on the new direct reduction processes which are already in operation? The other day I went to Hamburg to see the Korf process and was happy to have with me the hon. Member for Chesterfield. We examined it and we had an interesting day. No one is suggesting that this is the whole answer. But we have natural gas flowing freely around the country and Scotland's whole future is changing as a result of the discovery of hydrocarbons, liquid and otherwise, off its shores. Even though the mini-mill is so named, its capacity of a million tons a year is not all that mini. That sort of operation could well make a great deal of sense. As the mills are entirely modular, other pieces could be added for more production if they were wanted. A BP solution for the Scottish steel industry based on that type of plant could be very interesting.

Mr. George Lawson: As we have waited so long for a strategic plan, might we not have expected this kind of thing to be contained within the statement on a strategic plan?

Mr. McNair-Wilson: I should not like to comment on the speech of my hon. Friend the Minister, which I thought was admirable, but I agree that this is something on which we should all inform ourselves. Most of us taking part in the debate have been in the industry, as I was, and we have the industry at heart. We should get the decision right and I agree that we want as much information as possible. I see from a report in The Times today that Lord Melchett himself says he is in favour of the establishment of the Corporation as a BP-type organisation, which might well fit in with what I was saying.
There are pessimists who believe that for a 10-or 15-year period we shall have substantial over-capacity in the steel industry throughout the world. That is a respectable view which is quite widely held. With over-capacity we should have


all the problems that flow from it—belowcost pricing, cross dumping and all the mess we saw in the industry in the 1960s. I do not share that view, but I am sufficiently cautious to realise that we should be very silly to ignore it altogether. I believe that that view will be proved wrong. What we must have is a flexible industry able to take up the demand should it arise.
We must not go for size merely because other nations have been doing that. Very often their problems were different and they had to solve them in different ways. The Japanese industry is already not what it was. The Japanese economic miracle looks like being over. What we need is realism based upon a modern streamlined industry, with targets for production which do not go off into fantasy but which are achievable, so that ultimately we may have not only a good industry in this country but, as I am sure Lord Melchett wishes as much as any of us, a profitable industry serving Britain.

6.33 p.m.

Mr. David Watkins: This is by no means the first time I have followed the hon. Member for New Forest (Mr. Patrick McNair-Wilson) in a debate on the steel industry. It is a pleasure to follow him because he speaks from some knowledge of the industry. The knowledge he has displayed this afternoon is in striking contrast to the lack of knowledge displayed in some of the speeches from other Conservative Members earlier in the debate.
But I found it rather depressing that the hon. Gentleman supported the Government as an advocate of a smaller and declining steel industry. One of the most depressing features of the statement of the Minister for Industry on 8th May, and of his stonewalling and rather uninspiring defence of that statement this afternoon, was that it indicated that we are back at the beginning of one of those cycles of decline in the steel industry which has been initiated in every period of Tory Government in modern times.
In the 1930s the industry refused to modernise and expand, preferring to carve up the market and engage in restrictive activities in a restricted market, a decision which had disastrous consequences for employment in the industry and the industry's long-term viability.

It also resulted, on the outbreak of war only a few years later, a war which could be foreseen when that decision was taken, in the country's finding itself desperately short of steel in a national crisis.
In the post-war world exactly the same situation started again in the 1950s, after the denationalisation of the industry, when necessary investment for its modernisation and expansion was not undertaken. One of the results was that the oxygen process of steel-making, which had been pioneered in this country, was not developed here but was developed abroad. The British steel masters of those times did not want to know about it. They were not prepared to engage in the massive capital investment necessary to bring that system into general use in the steel plants of this country. That failure to develop the oxygen process on a massive scale in our steel industry, while the steel industries of other countries were doing so, was as great a scandal as the carve-up in the 1930s. It resulted in the British Steel Corporation's inheriting a backward industry.
Now we are depressingly back again at the beginning of the same sort of cycle. Instead of an ingot capacity of 42 million tons-plus by 1980, we shall clearly have a capacity of only 28 million tons, which is about the figure of the industry's capacity now. In terms of world steel production—and the steel industry is one of those which can only be set against the world background—that represents not a standstill but a decline.
The hon. Member for New Forest put his finger on a very important point when he spoke about the restrictions which will be placed upon our steel industry's production on Britain's entry into the European Economic Community, a point I made on one of the previous occasions when I followed him in a steel debate.

Mr. Skeet: Our entry into Europe would not preclude the BSC from taking a shareholding in, say, a company in France, and it could expand its capacity there. Therefore, it would no longer be just a matter of considering its activities in the United Kingdom.

Mr. Watkins: We have heard some astonishing statements in the debate. Now we are apparently being told that the


British Steel Corporation should welcome the contraction of the industry in order that it can be expanded in France or Germany. I find that unacceptable—[Interruption.] However the hon. Gentleman quibbles about it, the fact remains that that was the point he made, but I should not spend too much time discussing his advocacy of that policy.
I turn to a regional aspect of the statement of 8th May, when the Minister for Industry said there would be £130 million of investment up to 1974 on South Teesside. I remind the Government that the regional group of the corporation is not South Teesside but Teesside and Workington and that it covers a considerably wider area than the statement appears to indicate. What will happen in the rest of the group? In particular I am concerned to know what will happen to the Consett iron and steel works in my constituency, a steel plant employing more than 6,000 people—7,000 in times of prosperity—and crucial to the prosperity not only of the town but a wider area of north-west County Durham.
The hon. Member for New Forest referred to the Benson Committe, set up in 1966 by the old British Iron and Steel Federation. It produced a report described as an alternative to nationalisation. It proposed to phase the Consett works completely out of existence. I am glad to see that I have the hon. Gentleman's agreement.

Mr. Patrick McNair-Wilson: I am following the hon. Gentleman's remarks with interest. I remember the Consett works very well because a great deal of investment in Kaldo and LD converters was put in. It would be interesting to hear the hon. Gentleman telling us how viable he thinks Consett is in the light of all this new investment placed there.

Mr. Watkins: I am glad to say that the works is viable, much more viable than the Benson Committee expected. The report had the enthusiastic support of Conservative Members of the Standing Committee dealing with the Iron and Steel Act, 1967. The Benson Commitee recommended that there should be an ingot capacity of 35 million tons by 1975, not 28 million tons by 1980, as appears to be the recommendation of the joint steering group and of the secret and

even more sinister external advisers who are apparently to run the industry from outside, having been appointed by the Secretary of State so to do.
Since the Government took office there has been a steady nibbling away of the ancillary departments at Consett. Morale has never been at such a low level in my constituency. There is little confidence in the long-term future because of the policy to which the industry as a whole is being subjected. I put it to the right hon. Gentleman strongly that the Government must announce today what part of the investment in the Teesside and Workington group is to be expended at Consett. I have good reason to believe that the expanding future of Consett is linked with the establishment of a brown field site on Teesside.
I want to conclude because other hon. Members are waiting to speak. I have pushed a constituency case, as so many other hon. Members have done, and I make no apology for doing so because, as one of my hon. Friends has observed, that is basically what we are sent here to do. In doing so, however, I recognise that the prosperity of all steel towns depends on the prosperity of the entire steel industry and that the prosperity of the steel industry itself depends upon the prosperity of the nation and of the national economy. But everything we have heard in the last two years from the Government suggests that the Secretary of State seems determined to preside over the liquidation of the United Kingdom steel industry. Everything we have heard from hon. Members opposite in this debate indicates that that is so. It is a depressing situation, one which could set works against works and region against region. The quicker such policies and such Ministers are replaced, the better it will be.

6.44 p.m.

Mr. T. H. H. Skeet: I am glad to have the opportunity to follow the hon. Member for Consett (Mr. David Watkins), since he stated so many inaccuracies. We on this side have never contemplated liquidating the British steel industry, which we regard as of very great importance to the economy. He dismissed the argument about investment in France or elsewhere in Western Europe. Lord Melchett was not apposed to the idea when, fairly recently, two


European companies got together, Royal Dutch Hoogovems NV, of Holland, and Hoesch AG, of Western Germany. They decided that a green field site was required and decided that it should be in Holland. The two companies merged. I understand that at the time Lord Melchett considered whether the British Steel Corporation should go in with them as well. That would not have meant a diminution of production here but it would have meant expansion in Europe, increased investment and therefore greater profitability.

Mr. David Watkins: I must remind the hon. Gentleman that such proposals as may have been made in that direction —this comes back to the question of the industry being considered in a world context—was in relation to a British steel industry expanding and not declining. We are now faced with a declining industry.

Mr. Skeet: The essential factor to recognise is that it is no use producing steel if one cannot sell it. Our growth rate has been so low that we have been in great difficulties and we have not been able to market the steel we have been producing. Fortunately, the present Government have appreciated that fact. They realise that it is necessary to revise some of the longer term plans. If we consider the suggested target of 28 million tons, we should ask what the Opposition are suggesting. Is it the Melchett plan, or a higher figure?
After devising it and sending it to the Government, Lord Melchett accepted the Government's proposals. In other words, he has climbed down from the totality figure which, I understand, is being used by the Opposition as being the most credible. In other words, Lord Melchett has had a look at the world market. He has doubtless read the McKinsey Report, which has dealt with the world context, and has concluded that the appropriate target in the Joint Steering Group's Report would be suitable, either at the top end or at the lower end.
The Government have reached their conclusions on the same basis as other Governments. Japan had a target of 160 million tons per annum but revised it substantially downwards. The EEC's target for 1974 was 160 million tons now revised to 137 million to 148 million tons.

This is a 15 per cent. reduction. It is interesting to note that the decline in the United Kingdom target is approximately 15 per cent. The European Economic Community's target is also down by about the same percentage.
I do not think that the Government could work a project of this nature without taking into account a little of our past history. Let us take the decade 1960 to 1970. The Conservative Government were in office four years and the Labour Government six. Crude steel output in the United Kingdom increased by only 3 million tons to 28 million tons; in the EEC the output jumped from 73 million tons to 109 million tons. Japan was a little more successful. Its output rose from 7 million tons in 1950 to 22 million tons in 1960, and to 94 million tons in 1970. In the United States, output rose from 92 million tons to 120 million tons over the decade.
Obviously, if we examine growth of this magnitude in other countries, we see that they have been lucky domestically because they have had faster expansion. They have been able to market their products domestically and in exports. But in the United Kingdom we have not had the economic expansion looked for—and six years of the decade were the responsibility of the Labour Government, who could not get either the steel industry or the economy working. Therefore, it is wise that we should not ordain at this time an over-capacity which could inevitably lead to more plant standing idle and to unemployment.
I sympathise with any man who has not got a job. I am one of the first to say that the Government are responsible for seeing that unemployment is reduced. So I am delighted with the new powers contained in the Industry Bill, but steel is of course, going through troublesome times and may be one of its beneficiaries.
I want to make one or two recommendations on the subject of a green field site, which is part of the programme we have not yet seen. I enjoin the Government not to go ahead with one. This is because a steel capacity of 36 million tons would not warrant a green field site. It would have a capacity of no less than 10 million tons or possibly, according to some current thinking, about 15 million tons. An output of 10 million


tons is equal to a decade's growth in the United Kingdom.
The problem therefore becomes: how do we absorb it? If we cannot the problem remains. The capacity is there, money has been spent but the capacity is not used. We are contemplating a green field site, possibly at Hunterston but I have not a great deal of confidence in what is going on there. It could conceivably, however, be in Europe. Why are the Opposition so much against that? Could we not agree, on the same lines as the Dutch and the Germans, to have 50–50 participation between the Corporation and a French or Italian company? It could be extremely profitable.

Mr. James Tinn: Would the hon. Gentleman accept that Teesside, which is one of the major possibilities for a brown field site, has 10,000 good reasons for not wanting that development to go to Holland or anywhere else, in the shape of unemployed steel workers waiting for work?

Mr. Skeet: I appreciate this. Many people have the idea that we should simply build and engage labour but what happens when the production cannot be sold? How can the men be employed? The Government's policy has been to redeploy labour. It is important that we should not have unemployment, and it is certainly far too high at present. The Government are saying that we must be careful about this so that we get economic projects. We are being realistic when we say that the target must be between 28 million and 36 million tons.

Mr. John Biffen: Before my hon. Friend leaves this fascinating part of his discourse about a scheme partly financed by British taxpayers and partly by overseas capital, can he tell the House whether he assumes that a substantial part of the output of that Continentally-sited steel works would come back to the United Kingdom?

Mr. Skeet: I should have thought that a large part would not come back to the United Kingdom. We are meeting our own requirements. The new capacity from the green field site would be sold in Europe or the rest of the world. There would be no displacement of labour here. It would be a larger market for the

BSC. It would have much greater scope and a good chance of being more profitable because of its multiple outlets.
I recently had the opportunity of going to Hamburg to look at one of the minimills at the Korf works. There can be direct production of steel by the utilisation of electric furnaces and pelletising by means of natural gas. It is essential, however, that there should be cheap electricity and gas. The Corporation is prepared to participate in mini-mills on a 50–50 basis. Finally, it is not much good producing additional capacity unless it is modern. Let us not add up all of the figures, old capacity plus new capacity, and say that it represents 42 million tons or something like that. Let us say that what we have is 28 million to 36 million tons of modern capacity. Then English steel will be competitive.

6.55 p.m.

Mr. Eddie Griffiths: The hon. Member for Manchester, Withington (Sir R. Cary) suggested that steel debates are opportunities when hon. Members should parade their local problems, be they at Irlam, Shelton or any other place. He thought it was right that the debate should not pass by without those of us who pride ourselves in coming from the industry and keeping a close general interest in it looking at the position and assessing just where the Corporation is going. He felt we should make our observations on last week's statement and say clearly and precisely where we think the Government's calculations are wrong, what we think capacity ought to be and what kind of picture we see emerging for 1980.
I want to look at the experience of the industry particularly in the last five years. One of the tragedies about our industry is that we do not seem to get new capacity coming on-stream until the demand is in the trough. I hope that sometime next year we will run into boom conditions. Capital expenditure for 1973–74 has been sanctioned but it will be too late for the Corporation to make maximum use of it in boom conditions. The Minister might care to look at the tying up of capacity demand and requirements.
The hon. Member for New Forest (Mr. Patrick McNair-Wilson) advocated less Government interference. I do not see


why we cannot have this. Hon. Members opposite believe in it, I believe in it. The Under-Secretary of State believed in it when he was in opposition; the right hon. Member for Bournemouth, West (Sir J. Eden) accused us when we were in government of always having Ministers lurking over the shoulders of the Corporation and not allowing it to get on with the job.
We have a competent Chairman and we are paying substantial salaries to the executives of the Corporation, many of whom are steeped in the steel industry. We ought to let them get on and do a commercial job, run the Corporation and express their opinions and forecasts. One of the tragedies over the last few years, under both Governments, has been the refusal to allow the Corporation to charge the full price increases that it sought. No intelligent businessman prices himself out of the market and Lord Melchett and his advisers believed that they could have stood a substantial price increase. The Corporation's income over the last five years would have been substantially higher and it would not have been making its present losses if it had been allowed to make the kind of increases it had wished.
I am afraid we may begin to repeat our mistakes. It is because of regional and political pressures such as we have seen today and on other occasions that the Corporation is forced to make the wrong decision for short-term expediency resulting in long-term catastrophe. A classic illustration of this was when the Corporation wanted to build a large integrated steel plant. There were claims from Scotland and from South Wales. To try to satisfy both parties the plant was split, with half at Ravenscraig and the other half at Llanwern. Those plants will never fulfil as separate entities the hopes that people had for them had they been placed in the one location. Because of the appeals made in South Wales, Scotland, the North-East and elsewhere, we might be tempted to make the same mistakes.
We must decide whether the Corporation is to be charged with being profitable and commercial or whether it is to give secondary importance to that and meet the social consequences of the changes thrust upon the industry. If,

because it is expedient in the short term to do so, we say "We know you want to close that plant because it is losing money hand over fist, but there is a demand for jobs in this area so you must keep it open", it is wrong to look at the balance sheet and say that it is losing money hand over fist. The two considerations should be separate. The commercial activities of the Corporation should be separated from the social responsibilities which come with changes.
The anger about the statement which the Minister for Industry made last week has now subsided a little but it was an insult to the House. How hon. Members on the Government side with any knowledge of or respect for the industry can, one after the other like parrots, congratulate the Minister on an objective appraisal of the industry I do not know. It is a question not so much of what the statement said, but of what it did not say. The Secretary of State said that the Joint Steering Committee would
cover the following matters: the expansion of and consequent investment, by the Corporation at home, including the principle of a major new greenfield site; the means by which the Corporation will secure in the long term adequate supplies of ore and coking coal, with particular concern for the forecast short-fall of world supplies of the latter; the assessment of the desirability of undertaking a greater manufacturing operation at the source of raw material supply".—[OFFICIAL REPORT, 24th May, 1971; Vol. 818. c. 74.]
and so on.
The statement consisted of one and a half pages of foolscap paper with, I suppose, two bits of information. The first was a confidence trick because there were listed five centres of steel production, and figures of capital investment, amounting to, I think, £570 million, were quoted. Anyone who took an interest in the industry knew that £440 million of that had already been announced. Therefore, the extra for 1973–74 amounted to only £130 million. It had been said earlier in the statement that the Government were putting in £200 million. Why could not it have told us what had happened to the other £70 million? We have been told on numerous occasions that about £70 million is to be invested in special steels in the Sheffield-Rotherham area between now and 1980. Could the difference between £200 million and £130 million, namely, £70 million, be designated for special steels


between now and 1980? I should like to hear the Minister's view on that.
What about the capacity requirement for 1980—the 28 million to 36 million ingot tons? I agree with many people who have said that we should not plan on the basis that somebody thinks that, say, a 20 million ingot ton works should be put in the Outer Hebrides or somewhere else. There is no point in that kind of planning.
One yardstick for reaching a view about demand is the rate of growth. The growth stated by the Chancellor of the Exchequer in his Budget Statement of 1971–72 was 5 per cent. Lord Melchett's figure of 40 million ingot tons capacity was based on a growth rate of 41 per cent. The Government now say that the industry needs a capacity of only 28 million to 36 million tons. I contradict the Minister, because I believe that the steel requirement is a very good barometer of economic activity.
Therefore, we are under-utilising the capacity or the Chancellor's forecast of 5 per cent. growth is a little out and it should be 3 or 3½ per cent., or it is the Government's deliberate policy that by the 1980s we shall be importing large tonnages of steel.

Mr. Skeet: Assume that a works had a capacity of 40 million tons but that only 60 per cent. of it was used. Would it not be totally uneconomic, because 40 per cent. would be lying idle?

Mr. Griffiths: That is a valid point. I would far rather that we had extra capacity available than that we should be in need of capacity when there was a demand at home and abroad and we had to buy from abroad.
The British Steel Corporation exports about 4 million ingot tons or the equivalent of finished products. If the industry has a capacity of 30 million tons, and assuming that the prediction of the Chancellor of the Exchequer is near the mark, from where is the extra steel to come for our manufacturers? Is it to come from the private sector? Will the Government say, "We propose to curtail the Corporation's output"? Will they say to the private sector, "Get your plants in now. There will be a big demand for your products by the 1980s?" Will they say to the Corporation, "We are not very

optimistic about your export performance. We have no confidence that you will export satisfactorily. So, if this demand materialises, cut your exports and divert your production to the home market"?
If we achieve a growth rate of 4½ to 5 per cent., I predict that we shall be importing the equivalent of 7 million ingot tons plus of steel. If the balance of payments situation is strong and the economy is buoyant, we might just about be able to afford it. But if we run into trouble our industries will be short of materials and we shall run into balance of payments difficulty, with all that that involves.
I should now like to consider the question of our capacity by 1980. When all the investment now scheduled and sanctioned by the Government comes on stream by 1980, we shall have in quality capacity second to none in Europe and comparable with that of the Japanese. We shall have an efficient highly productive industry making 25 million ingot tons of low-cost competitive steel. Taking the Government's lower figure of 28 million tons, this means that there will be no expansion because by slight modification to the 25 million tons we get the 28 million tons. In addition, there is another 12 million tons of productive capacity scattered throughout the country in relatively inefficient works which are near to obsolescence and others that are based on hearth practices, which the Corporation is committed to terminate. So the Corporation must take out this 12 million ingot tons of capacity by 1980 so as not to dilute the profitability of the remainder.
I say to my hon. Friends and to hon. Gentlemen opposite who use these debates to press the case of a particular works that I wonder how the BSC is losing money. We hear from Irlam and other places how good the plants are and how much profit is being made, and yet from Monday to Friday of every week in this current year the Corporation is losing £2 million. Where is the money being lost if the plants that the champions are advocating are doing so well? If we took this view to its logical conclusion and told the Corporation to spend a bit of money on the obsolete plants the BSC for the next 25 years would be saddled with works which would barely break even and which


would dilute the profits from other efficient works, and we should end up by taking the steel industry to the wall by the year 2000.
We must do a little bit of surgery now. The inefficient, obsolete plants must go, and we must build on the efficient plants. Everyone know where they are—Port Talbot, Llanwern, Scunthorpe, Teesside and Ravenscraig. These are the centres for bulk steel-making. That is the way we must go to build on the 25 million ingot tons.
I am not a great fan of mini-plants. There is a special case for electric arc plants which make special steels. That is the only way to make alloy steels, and it is right that electric arcs should be used in that context. I can understand direct reduction plants being used occasionally for particular reasons for the production of half a million to one million ingot tons a year. But from all the statistics I have been able to find, the bulk steel-making of between 8 million and 10 million ingot tons the direct reduction plant is not competitive with the BOS plant. As far as I can see, bulk steel-making will be based on BOS plants.
I will take the opportunity offered by the Minister of saying what I think should be done for the British Steel Corporation. First, we should get rid of the Joint Steering Committee. It is an insult to the Corporation and has served no useful purpose. If the document presented to the House by the hon. Gentleman is evidence of the Committee's activities, I humbly suggest that the Committee was redundant before it even started. It has made no intelligent contribution to the future of the steel industry during the 18 months in which it has been sitting. I endorse the view expressed on this side of the House that it was a time-wasting exercise to enable the Government to put off making a decision and telling the Corporation what to do. The Corporation should be given more freedom to make judgments and the Government should back its judgments. We need less Government interference. We must tell the Corporation to modify its estimates and to plan by 1980 a 40 million ingot ton capacity. The 25 million ingot ton capacity can be increased to 28 million by increased productivity, more efficiency costing, bulk buying and so on.
I recommend a brown field site on Teesside at Redcar with a capacity of between 8 million and 10 million ingot tons. That would give about 38 million ingot tons. I have no axe to grind—I am looking at the industry generally—and I would sanction the Anchor No. 2 scheme. That would give the 40 million ingot tons. Time is not on the side of the Corporation. With every delay there will be less opportunity for the Corporation to compete efficiently with its European competitors.
I started by saying that I came from the steel industry. I spent 17 years as a steel worker and I am here because I was in the steel industry. I am not sufficiently big-headed to say that whatever profession I had chosen I should have found my way to the House of Commons. I am proud to be here and to carry the flag, not for Sheffield which I might have done, but for the steel industry.
There are 250,000 families of steel workers throughout the length and breadth of the country. The men feel that they are the best steel workers in the world. Their craft has been handed down from father to son. I will fight any move by the Conservative Government or by a Labour Government to sell out this heritage of steel-making ability, either to the slant-eyed oriental gentleman in the Far East or to our Continental partners if we go into Europe.
I come from the biggest union in the industry, the Iron and Steel Trades Confederation. That union has passed resolutions to the effect that it will entertain no more closures and redundancies until such time as a sensible and adequate capital investment and expansion programme is undertaken by the Corporation and sanctioned by the Government.
I plead with the Government to tell the Corporation to adjust its capital investment and, in consultation with the trade unions, to take out all the obsolete and antiquated plants. We want a capacity of 40 million ingot tons. With a strong, virile, competitive steel industry Britain in the future will be freer and more independent.

7.17 p.m.

Mr. John H. Osborn: The hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) has made


a bold speech which contained one contradiction. In one breath he asked the Government to tell the British Steel Corporation to plan a capacity of 40 million ingot tons and in the next breath he asked for complete freedom for the BSC to exercise its own judgments.
I have listened to many debates on the steel industry, and I wonder whether the steel masters of today—namely, hon. Members in the House of Commons—will be condemned by history for making bigger mistakes than did those who ran the steel industry before 1967 and who were so criticised by hon. Members opposite at that time. We in the House of Commons are the steel masters now, whether we like it or not, because of the powers given to the Government in the 1967 Act. Those associated with the industry will judge for themselves whether this debate has been a great step forward in bringing about a viable steel industry within Europe in the years to come, which will be an asset to the nation, or whether the debate has been irrelevant and. perhaps, irresponsible.
My hon. Friend the Minister has been censured for not being all things to all people. He has been censured for not doing what Governments in my view should not be doing. As the hon. Member for Brightside said, he has been pressed to keep in being the very steel works that perhaps should be closed because of old equipment and poor productivity.
Over the years, particularly in the early 1960s, hon. Members on the Labour benches have been crying out for change. They have complained that the rate of change in the steel industry is too slow. Now we have seen change. We had to have nationalisation to bring about rationalisation. Change inevitably brings with it uncertainty. Therefore, it is surely a blatant contradiction by Labour Members to ask for change and then to complain about uncertainties, because the management of the BSC in the first place and the Government and the joint steering committee in the second place appear to advance only where the ground is firm. It is surely right that management should make decisions only when it is certain that the basis for them is right.

Mr. John Mendelson: May I intervene for one moment?

Mr. Osborn: I hope the hon. Gentleman will allow me to make my speech, but if I upset him again I shall give way.
It is irrelevant whether a statement is made by the Secretary of State or by the Minister. I prefer the delegation which is indulged in by the present Government and I welcome the fact that my hon. Friend made his statement on 8th May as well as opening the debate.
As a result of nationalisation those who run the steel industry have always had the Treasury, at one time, Mintech and now have the Department of Trade and Industry breathing down their necks, with Parliament taking the industry up by the roots every few months, so that Parliament can debate how the industry has grown.

Mr. Mendelson: The hon. Gentleman really has upset me now. A few moments ago he said that the Corporation and the industry must only advance when they they think they are on firm ground. Is he not aware—and I am sure that with his connections with the industry he is aware—that in February, 1971, Lord Melchett, the board and the corporation submitted a 10-year plan to the present Government setting out estimates of growth and development year by year, firmly worked out? Are not the Government now frustrating the aims of the Corporation by refusing to accept the Corporation's view about future developments in the next 10 years?

Mr. Osborn: It was a mistake to give way to the hon. Gentleman because what he has said contradicts the impression I had gained. Perhaps we shall have clarification of this point when my hon. Friend replies to the debate.
I return to my introductory comments. The British Steel Corporation is undoubtedly big business. No consultant or merchant bank would have brought 14 large companies together in one go as was the case in 1967. The industry has a turnover of roughly £1,210 million with capital assets of £1,245 million. It is a huge industry which employs 250,000 people and has already had to cut back on jobs. According to the industry's annual report it has cut some 19,000 jobs, and the figure today may be even larger.
The complexities of the industry in terms of plant are enormous. Shortly


after the General Election I was invited to visit the Special Steel Division headquarters at Topton Road in Sheffield and saw there the management services unit. There were various computer models to assess the different production techniques and cost factors. Since I live in the area, I cannot help hearing when a new model is tried. The various raw material prices and selling prices in terms of final product make it difficult to decide which particular capital investment should be made at one time.
My hon. Friend the Minister stated on 8th May that as a matter of urgency the Corporation expected to make a firm strategic recommendation later in the year, and I believe that the Corporation is still assessing and comparing one computer model and one project against another. Neither the Corporation nor the joint steering committee has yet made up its mind which way to go. Will the Minister confirm what the position now is?
What attitude should we adopt to today's debate? We are anxious, whatever steps are taken by the Minister on behalf of the Government, to have a viable, healthy steel industry—and I include the private as well as the public sector. Whether we like it or not, following the statement on 27th April we are committed to the fact that the bulk of the steel industry will remain within the public sector. I hope that in the years to come, perhaps following entry into the EEC, we do not find ourselves too rigidly committed to political dogma. If all the funds of BSC were no longer to come from the Treasury but were to come from outside, the autonomy which has been requested no doubt could be given to the industry and Lord Melchett has referred to a BP type of solution.
There is no doubt that the industry has been put in shackles by Government and Parliament from the time of the 1947 Act, and even prior to that. Since then we must remember that the Conservatives set up an Iron and Steel Board. The steel industry has had interference from Parliament for a very long time. Labour Members opposite are asking for the industry to be released from interference by the House of Commons, when this is, in fact the very intervention which has arisen from nationalisation of the industry in recent years.
The Minister has been criticised for a capital investment programme that is too low. He reminded us today that approval has been given for expenditure of £200 million in 1973–74 and this could give rise to a larger sum, comparable to the £265 million allocated for 1972–73. It was said in last year's annual report of the BSC that investment is now at the highest level since 1962.
There is a considerable lack of information on which to base a judgment on what is to happen to the industry. I hope that Lord Melchett will see fit to publish much more information in the annual report so that we may have the background on which to make a judgment.
The hon. Member for Brightside reiterated a view which he has put in the House on many occasions that he obviously supports the construction of new steel plant on green field and brown field sites. This is a matter we must consider.
What concerns me—and I raised this matter in a debate on 24th May last year—is that the most modern plants hope to achieve a productivity of 700 tons per man per year. Some of the better plants in the United States are producing 300 tons per man per year and elsewhere in the United States the average is about 200 tons per man per year. In this country the figure is about 100 to 125 tons per man per year.
It would be useful to have some information on the manning in the British steel industry not only in the period of 10 years to 1980 but so that we may have the picture at the turn of the century if we are to aim at a productivity which is comparable with that which obtains elsewhere in the world. If we do not achieve that sort of productivity and if our manufacturing costs do not come down, the markets mentioned by the hon. Member for Brightside and others will not be available because our costs of production will be too high when compared with the highly competitive production costs in Australia, South Africa and elsewhere, let alone competition from the European Community countries. It could well be that we have to face the possibility of primary production in the shape of billets coming in from these countries, because over the years their costs of manufacture have been well below ours. That is the reality we have to face.
The Anchor scheme costing £250 million which is now under way is a major scheme which I hope will give increased productivity to the Scunthorpe area. The consequences of that scheme, which is a first stage towards projects on brown field or green field sites, inevitably will mean that factories elsewhere will have to face the closures which have been put to us already in this debate. Are we in this House prepared to slow down those closures for social reasons and to pay the BSC a subsidy to keep these companies going for a few more years in order to make the change less sudden? Will this be the outcome of yesterday's debate?
I believe it is right that there should be pressure on my hon. Friend for the development of a larger unit which will be competitive with the one between Hoesch of Germany and the Dutch steel company Keninlikje Nederlandsch Hoogevens en Staalfabricken which I understand may have a capacity of 10 million tons. By being competitive we can keep a steel industry in this country. That is the problem that we have.
There has been considerable debate about the likely markets for steel. I will not discuss them in detail, because most of these points have been covered. But it seems that in the United States in recent years the demand for steel has been well below that envisaged, and in much the same way many countries with large factories find today that they are operating well under capacity.
My third point is to discuss the effect of British entry into Europe on our price levels. As a result of the CBI initiative and the Government statement, BSC prices were restricted some time ago. It was greatly resented. However, from 1st January onwards there will be a new situation and, according to a reply to a Parliamentary Question the basing points have been announced already. However it would be useful to know what is the current level of British steel prices compared with European prices. Are we below, slightly below, or are our prices already higher? If our prices were to be raised to a level at which they would be higher than European prices, imports would pour into the country. It is price levels based on costs of manufacture which determine which way trade goes.
The area which has been most affected by changes and the area causing most concern to me in this debate and those who work there is Sheffield. It was the home of steel. There were interventions in the debate a year ago when it was hoped that the whole of stainless steel manufacture would go into the public sector—and I was not over-enthusiastic about this. In answer to a Question which I asked only last week I was told that the final agreement between the BSC and Thomas Firth and John Brown Limited had been signed. In the May issue of Steel News reference was made to the setting up of a Stainless Flat Products Division consisting of three works, those being Panteg, Ford Lane, Stocksbridge, and Shepcote Lane, Sheffield. Mr. F. J. Feltoe has been appointed general manager. As a competitor, 20-odd years ago I was fortunate enough to witness and know about the original development at Shepcote Lane. This bold step forward in Sheffield made it possible for stainless steel coils to be made in this country. However the type of investment in Shepcote Lane will not be enough if Britain is to be competitive in stainless steel.
I hope that my hon. Friend will draw the attention of Lord Melchett to the dire straits in which Sheffield finds itself and that he will give favourable consideration to the possibility of erecting a stainless steel complex which is competitive with the best anywhere in the world.
My final point is to underline the inadequacy of a debate of this type to assess the various problems facing those running the steel industry, the steering group and my hon. Friend the Minister. The hon. Member for Chesterfield (Mr. Varley) described the steel industry as demoralised. I suggest that many of the difficulties referred to in the debate are but good reasons for never having nationalised steel in the first place. One of the purposes of nationalisation is the ownership by the people of the means of production, distribution and exchange and their supervision by the Government and Parliament. Are we to take it that right hon. and hon. Members opposite have had a change of heart and that they want that supervision to be taken away from Parliament and to go elsewhere?
This is a poor shareholders' meeting, and I doubt whether a Select Committee


would be a better place in which to continue it. Perhaps a question and answer session with the Minister and Lord Melchett would be more productive. Unfortunately the outcome would not be published, but I see no way for hon. Members to obtain a better understanding of the problems facing the Minister of the day and the chairman of the industry. A few teach-ins and visits would be more productive than another debate such as this. What is certain is that the information available to us does not tell us the reasons why decisions are taken. For that reason it is difficult to comment wisely on the statement made on 8th May for instance. I hope that the Minister will try to rectify the position.
I am afraid I have been on my feet too long——

Mr. John Mendelson: That is the hon. Gentleman's best point so far.

Mr. Osborn: Britain must have a viable steel industry which is competitive with the best in the world. The hard fact that we have to face is that many of our plants are too small and outdated.
The Government will have to review the increased productivity and the cheaper manufacturing costs arising from green field or brown field projects such as the Anchor project. But there comes a time when some of our smaller plants must be closed down. That is the time when all hon. Members feel bound to fight to keep in being plants which should be closed down, when they operate in their constituencies. That is the dilemma that Parliament faces regardless of whether steel is nationalised.
The national Press, including The Economist and the Metal Bulletin, have described my hon. Friend's statement as either a damp squib or a mouse. It is an interim statement only. The process of developing a corporate plan for a huge industry like the BSC must take time. I do not share the views embodied in the Opposition's Motion and I support the Amendment put forward by the Government which I shall vote for tonight.

7.47 p.m.

Mr. John Forrester: I cannot possibly hope to match the detailed knowledge of the hon. Mem-

ber for Sheffield, Hallam (Mr. J. H. Osborn) or that of my hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths). However I am fortified by the assurance of my hon. Friend that he will not explode if I make a constituency point in the course of my remarks, which I hope will be brief.
There seems to be no dispute between the two sides of the House about our need for a substantial modern steel industry as the basis of our economy. We appear to agree also that the industry must be competitive and must have the right quality, the right price and the consumer's interests at heart. I am one of those who believe that, with the right encouragement, the BSC is capable of achieving this.
A great many points have been made about investment in the industry, and I suppose many of us would be interested to know why private industry did not make investments in the period immediately preceding nationalisation. Certainly the announcement made by the Minister a fortnight ago was an encouraging first step, but he knows that we shall judge the Government's actions when we know what the complete package is to be.
It is this target of 28 million to 36 million tons which is depressing. This is the figure which has made the whole of the British steel industry despondent. It is well known that the Corporation wanted a higher figure and wanted to invest on that basis. I accept that forecasting is a hazardous business. One hon. Gentleman opposite talked in terms of the National Plan, but that was not exactly the most accurate document ever produced. This estimate of 28 million to 36 million is a wide range, and the figures themselves indicate that it is very much an imprecise science—one that seems to be more akin to guessology than technology. The Government must not be surprised if these figures invite the kind of criticism which they have attracted so far and will continue to do so in the future.
A fortnight ago, and again today, the Minister drew attention to the dangers of over-capacity in the industry and reminded us that this could have particularly serious effects on unemployment in areas which were particularly sensitive


to it. It is true that if there is gross over-capacity unit costs of production, and so on are increased and the industry can price itself out of the market—we accept that—but I agree with what was said by my hon. Friend the Member for Brightside, that it is better to have some over-capacity which is an incentive to the industry to go out and compete with other countries which are major steel producers, rather than have under-capacity.
If there is an under-estimation, or if there is under-capacity, the effect on employment will be just as serious, but it will come sooner. It will mean that people are sacked immediately instead of at some future date, which the Minister perhaps suggested. Under-capacity could lead to complacency. It could leave us in the position that if there were an upturn in world demand we would not be in a position to meet it, or to meet any upturn of demand in the home market.
It is criminal to think that men will be condemned to the scrap heap on the basis of figures which seem to be nothing better than a guess by the Government, or by the consultants who advise them.
The greatest cause of dismay and frustration in the industry is the failure of the Government and the Corporation to publish the long-term strategic plan. I accept that the Corporation is perhaps primarily responsible for getting out the details and putting them before the Minister for his approval, and clearly the Minister has to weigh carefully all the consequences before approving or disapproving the Corporation's plan when it comes to him, but the men and women in the industry have been waiting for at least 18 months to know their fate, and now we are told that they are unlikely to know it before the late autumn at the earliest. In the meantime, there are rumours and inspired or uninspired leaks in the newspapers. Many of the detailed explanations which appear there seem to suggest that somebody somewhere knows precisely—or almost precisely—what is going to happen to the steel industry. The only people who do not really know what is to happen to them are those on the shop floor and they, surely, are the ones who should be the first to know.
The Government have to take a great share of the responsibility for the delay

in producing this plan. Obviously the time which has been taken to arrive at the target has had some effect on this and has altered the time-scale which perhaps the Corporation once had, but my belief is that the Government have encouraged the delay in publishing the plan because this is clearly the wrong time, with the present economic climate of unemployment, to publish it. No doubt the Government hope that by November the economy will have upturned as a result of the Chancellor's measures and the unemployment figure will be lower than it is now—it has started to fall. It will then be much easier to publish and sell a plan which will put 40,000 steel men out of work than it would be now, with 1 million unemployed. This is a political decision which the Government are entitled to take into account, but the overriding consideration ought to be the relief of the stress under which men and women who work in the industry are living.
To make a constituency point, areas such as Stoke-on-Trent have gone through traumatic experiences with pit closures and the contraction of older industries, but in Stoke we are also faced with a declining labour force in the pottery industry, although the industry is maintaining its production, and perhaps even increasing it. This is a question of techniques, and so on.
If the Shelton Steelworks are closed, or partially closed, as appears possible, we shall be faced with the problem of another 2,000 to 3,500 unemployed. But it will not just be a loss of that number of jobs for the present working force. It will mean the loss of that number of job prospects for future generations, and this is the tragedy facing the old industrial areas unless new industries are invited in or are directed to them by the Government. In the past, certainly in North Staffordshire, it has been possible for many people made redundant to find employment in smaller industries and in service industries. Many have found jobs in pastures new and have left the area altogether, but the safety net into which these people have fallen in the past is wearing out.
We feel that any major closure of this kind could be a catastrophe for our area. It could turn North Staffordshire into a depressed state from which it will be


very difficult for it to emerge. In yesterday's Bill the Government indicated their concern about the prospects facing development and depressed areas. They realise now that it is easier for an area to fall into poverty than it is to regenerate it and get it to climb back to prosperity.
Unprofitable mines were subsidised by the Government and given a life which was rather longer than expected in order to minimise the social consequences of closures in certain areas. It may be that at some time in the future the Government will consider doing that for some steel concerns. They may realise that it would pay them to inject money into an industry rather than face the cost of throwing thousands of people on to the dole. Shelton is not begging for charity. It is one of those profitable concerns which abound in the Corporation. It is crazy that the Government should be closing profitable concerns and trying to set up some pie in the sky projects which may, or may not, be profitable.
The Minister, his colleagues or the BSC have a tremendous responsibility here. They hold the future of thousands of men and women in the hands, and I am sure that when they make their decisions they will take into account all the social consequences and weigh them with the utmost care in order to ensure that the industry is run for the benefit of the work people in it and the country as a whole. Modernisation, rationalisation and profitability are gods to whom we must pay respect, but not at the expense of completely disregarding the poor mortal souls who work in these concerns or depend upon them.
In conclusion, Lord Melchett has said that the BSC will adopt the basing point pricing system if we enter the EEC. This gives some of us a little hope that thoughts on maxi-plants will not rule out consideration of establishing profitable mini-plants near to the sources of raw materials and within a reasonable distance of the consumers they serve. But the same thinking also raises the fear in many minds that the green fields of Normandy or, perhaps, Belgium or Kent may at some time appear more attractive or profitable than the green fields of Lincolnshire, Yorkshire or Staffordshire. The steel workers need assurances now that there will be jobs for them. Generous

and thoughtful though the BSC may be, redundancy payments are not an attractive proposition any more to a man whose prospects of re-employment are practically nil.

7.50 p.m.

Mr. Tom Normanton: I welcome the fact that the steel industry has been chosen by the Opposition for debate today. So far the debate has shown the keenness of both sides of the House to be constructive, perhaps to varying degrees, critical though the contributions have been. But there is and has been a wish to be constructive and to make useful recommendations and put forward good ideas. I regret deeply, however, that steel debates can so easily degenerate into what I can only regard as occasions which are good for party politics but bad for business. Fortunately, this is not one of those debates.
Criticisms there have been, and I am sure that they have been welcomed by my hon. Friend the Minister for Industry. Most of those have related to location, size, capacity and the question of the targets set by the Government for this important industry. Some of the targets which have been suggested can only be described as ranging from pie-in-the-sky at one end of the scale, to burying one's head in the sand, perhaps, at the other end. Probably all right hon. and hon. Members in the Chamber today will add their support to the call of my hon. Friend the Member for New Forest (Mr. Patrick McNair-Wilson) when he appealed for a sense of realism. What is realism within the context of the debate? It is a question of facing the economic and industrial facts of life. Surely that can be done only if the British Steel Corporation is made viable, if it is put in a position in which it can stand competition in the world as a whole and in the home market in particular.
Many ways of doing this can be put forward. But I question whether anyone, inside or outside the House, can possibly challenge the desirability, indeed, the absolute necessity, for the optimisation of throughput of the plants. If we are to achieve maximum viability we have to optimise both the throughputs, in terms of productive capacity, and the techniques available to an industry of this size by virtue of the scale of operation. We must also optimise the utilisation of


capital. This must express itself in the lowest possible element of ultimate overhead costs when steel is made available to the consumer. We have also to optimise our utilisation of labour and, in doing so, give the certainty of continuity of good, well-paid employment to those who work in the industry.
We also have an opportunity to concentrate on optimising the market position by virtue of having a market which is not captive but which is at least reasonably close to productive plants. I venture to suggest that this is not a job for politicians. This is a job for men in industry and in business. In this case it is a job for men in the steel industry. That is my first point.
We as politicians do the greatest possible disservice if we pompously and conceitedly believe that we have it in our power to make detailed technical, commercial and economic judgments about the management of the British Steel Corporation. If the British Steel Corporation's plants are to operate to full capacity——

Mr. Lawson: Is the hon. Gentleman aware that a body set up representing the Government and the industry has been engaged, we understand, in a deep-seated, continuous study of the industry and its problems? We have had a statement on its findings. Are we not entitled to expect that that statement will contain some information?

Mr. Normanton: Yes, I would not question that. But would the hon. Gentleman care to continue? That discussion has taken place in collaboration with the steel industry, and I believe that out of that discussion came the statement from my hon. Friend on 8th May.
I would hope that the way in which we can help the steel industry best, and the BSC in particular, is to do what has been done now, that is, to arrive at an agreed level, a target if one cares to call it that, at which the industry believes it can run at optimum throughput, at maximum capacity, meeting as it will and taking into its calculations the home market, which must be its primary objective, and its long standing and, as it trusts and believes, longer lasting participation in world export markets.
Then we come to the question of the way in which the steel industry can and

must ride the cyclical changes of trade in the world in which it operates. In this sense we in Britain are not excluded or isolated from this in any degree. Here my second point is that this gap can and must be filled—prudently, wisely and with the best interests of the industry in mind—by imports. It is nothing of which the British Steel Corporation or those who are employed in the industry need have fear, on one condition: that the British Steel Corporation engages in the closest possible collaboration with an extremely important component part of the engineering and trading community in this country. I refer to the steel stockists.

Mr. Kaufman: Like myself, the hon. Gentleman is the representative of a greater Manchester constituency, and greater Manchester is very much affected by the Irlam problem. In advocating the importation of steel, would he say that Irlam ought to be allowed to provide for our markets before we start importing, as we very much need the employment thus provided in the greater Manchester area?

Mr. Normanton: In the short time available to me, I do not intend to get bogged down in detail, though I could do so. I could do so from a position of being well informed—not as a producer of steel, which I am not, but as a user of steel. This does not neutralise my particular point that the question of what happens at Irlam, or what happens at any particular plant, should not—except within the context of a point which I shall make shortly—be a matter for party politics. I fully recognise the justifiable right of any hon. Member to speak for the steel workers in his constituency.
I would do the same, to the maximum of my ability. But we are not talking of that. We are talking about the industry as a whole. I earnestly hope that the House will concentrate on the interests of the BSC as a whole rather than get bogged down—though emotionally inevitable—in individual consideration of plants. I do not cross swords with the hon. Member for Manchester, Ardwick (Mr. Kaufman). All I say is that this is not the occasion for that to take place. Therefore, I ask that the closest possible collaboration should be established with and demanded from the British Steel Corporation by my right hon. Friends on


the Front Bench. There should be collaboration with the steel stockists as they have an expertise of considerable value not only to the Corporation as buyers but to the industry which the Corporation and in a sense ourselves serve.
The stockists have an expertise in market evaluation and service to the market both in quality and quantity. We would be doing a great disservice to our exporting and manufacturing engineering industry if we were to inhibit that section of industry. That section will be in the market to import from the Corporation and to trade in steel. That trade relationship between the Corporation and the stockists has to be carefully and sensitively handled. There may have to be an element of crystal ball gazing. It may be necessary to have a small co-ordinating group to ensure that there is a farsighted balancing of maximising throughput of the Corporation's plants and ensuring that there is no shortage of supply of appropriate qualities and quantities of steel to the users which this industry must serve.
I regret the way in which over some decades there has been repeated evidence of doctrinaire attitudes towards the steel industry. It could be said that this goes back not to the early days of nationalisation but to political considerations, whether they be doctrinaire or otherwise, which may well have handicapped or inhibited the industry for far longer than.
I earnestly hope that in considering the future rôle of the Corporation there should be no possibility of such doctrinaire views inhibiting the establishment of specialised steel production plants or the establishment of integrated production plants with other manufacturing processes not for market distribution and resale other than in a manufactured form.
I appeal to my right hon. Friend the Secretary of State and his colleagues on the Front Bench to give the maximum possible freedom and exercise of judgment to the Corporation but not necessarily or exclusively in formulating their plans, as I believe they must do so in collaboration with the Government. Once the Government have reached this point—and as I interpret my right hon. Friend's statement—it is in the implementing of these plans that absolute freedom should

be given. The absolute freedom I want to see is one which could be socially painful, but if we are to impose upon the Corporation the inhibiting restriction of having to pay predominant attention to the social aspects of its policy we must be prepared to pay the price.
I strongly welcome the views along those lines from some hon. Gentlemen opposite. I should like to see the Corporation having absolute discretion to decide the location and size of their plants, the qualities of steel they are to process at those plants, the technical decisions that they might have to introduce and certainly any commercial policy. Having done that there will inevitably be social consequences which are matters for Parliament. That is where the nation comes in and takes over, having given to the steel makers the freedom to exercise their judgment and intelligence in optimising throughput and bringing their prices to the lowest possible level. In other words, to make the industry really competitive there will be a price to be paid. I suggest that that is not a matter we could deal with effectively or fruitfully in this debate. It will be a matter which will have to come before Parliament once the Corporation has been given that protection.
I welcome the statements made by my hon. Friends from the Front Bench as being realistic, having faced the facts of life as they see them today. They represent a sober assessment of the prospects for this industry. The rôle of the Government will be to provide the finance and to ensure that the policy is acceptable. Having decided that, the industry will he left to get on with the job.

8.6 p.m.

Mr. Barry Jones: I am sorry that the hon. Member for West Flint (Sir A. Meyer) is not now in the Chamber. For most of the time we have managed to co-exist as sharing a representation for the County of Flint, but his speech this afternoon was not calculated to generally help the British Steel Corporation. He mentioned the word moonshine. I am inclined to say that I would describe his speech as moonshine. He implied that labour relations in Flintshire, in the Shotton plant, are not very good when I think that they are excellent. Generally speaking, his speech was the sort of speech somebody would


make in the drawing room circumstances of the Forsyte Saga. It was not good enough.

Mr. Tom Boardman: In the absence of the hon. Member for Flint, West (Sir A. Meyer), may I say that I believe that he was misunderstood and has been misconstrued. I am sorry that he is not here now to put the record right concerning his reference to labour relations. When the hon. Gentleman reads the OFFICIAL REPORT tomorrow he will find that he has misunderstood what was said by my hon. Friend.

Mr. Jones: Being the son of a steel worker, the grandchild of a steel worker, and somebody who is intimately involved with the trade unions of East Flintshire's steel plants, I felt I had to speak as I did.
I still have the impression that the Corporation was dragged kicking and screaming into agreeing with the Government's doleful production targets for the 1980s and that the Corporation was sold down the river last year by the Government's negotiating teams during the frenzied scramble at Brussels over European entry. At one time I expect the steel masters of the Ruhr blanched at the prospect of a revitalised British Steel Corporation competing with them. However, I think they can start to count their profits again because the Tory Government has put a series of leeches upon the flanks of the Corporation. It is not possible now for the Corporation to adopt a totally new approach to the location of its plants throughout the country because there is a history of sheet making over many years. I also believe, to some extent in opposition to the hon. Member for Cheadle (Mr. Normanton) that social considerations should considerably modify the decisions reached by accountants and other abrasive and purely cost-effective professionals. There is not a site in the United Kingdom which combines the social, economic and physical requirements as stated by the theorists.
If we wish to be rational, the answer is to scrap all existing iron and steel plants and import billets and other semi-finished steels for rolling or re-rolling. That is social and economic nonsense and would also be political suicide, but

if we wanted to carry it that far that would be the way to do it.
I believe that social considerations are highly important when deciding the future of the British steel industry. I suspect the prestige projects of green field and major brown field sites may not appear in Britain for perhaps a decade or so now. I believe in strong growth policies rather than the patch and mend policies. If we go for a careful and intelligent expansion of the majority of existing plants in the United Kingdom we will probably be on course for short and medium-term gains at minimal cost. These heritage expansions combine low costs with flexibility and are a good return on capital invested in the current situation.
Since the demand for sheet steel in car-hungry Britain is so large, I suggest the strip mill division of the Corporation should have the greatest priority. My prediction—albeit hazardous—is for major plant concentrations served by deep water terminals at, say, Swansea Bay, Mid-Lanarkshire, Teesside, Scunthorpe and possibly, I hope, Deeside. In my view the Corporation should go for maximum growth, but its investment programme should he tied to a strong Governmental regional aid programme.
I should like to conclude—I am not ashamed to do so—with a reference to my constituency. Shotton Steelworks is in North Wales—I sometimes get the impression that the House might think there is no steel industry in North Wales. It employs 13,000 people and produces a large proportion of our annual strip mill production. However, there are signs that within a decade Shotton could lose 6,000 jobs, because some bright spark at Grosvenor Place has convinced himself that it would be cheaper to transport molten metal 100 miles across the Pennines to Shotton for finishing processes. However, Shotton outstrips most steel plants in terms of profitability.
The Minister for Industry gave a courteous reception to a deputation which I took to his Department recently. I know he was impressed by the steel men who talked to him and by the points they made. I hope he will also be impressed by the shrewd and commercially viable plans which are proposed for the development of the Shotton works which


will cost, I believe predictably, £50 million. Shotton will very soon need two BOS furnaces, continuous casting and an iron ore terminal at Birkenhead.
A point which I think I can emphasise is that currently at Shotton a £6½ million coke ovens project has been constructed. It would be wrong and very foolish if, having constructed that part of the works, there was then to be a sentence of death on the rest of the steel-making equipment there. That would then be a hopeless and foolish white elephant.
Shotton is the economic lynchpin for not only East Flintshire, but North-East Wales, parts of Cheshire and Merseyside. It is conceivable—I hope not—that Shotton could be the town that was murdered. However, I guess that the Shotton steel men would not take tamely a decision to run down the works, because they are men of character who would resist that sort of cutting of their throats.
On behalf of a whole community, I ask the Minister to give us good news and to say, for example, that he proposes an iron ore terminal at Birkenhead. Is the Minister aware that Shotton steelworks has the fastest-growing, hinterland demand of any strip mill in the United Kingdom? Is he aware that to reduce the numbers employed at the steelworks would be to destroy the growth potential that exists within the region I have described? Is he also aware that the steel mill at Shotton accounts for a third of all local jobs? I hope that he, or his right hon. Friend the Secretary of State for Wales, will visit the Shotton steelworks and look at the work being done there.
I have come to praise Shotton, not to bury it. I know that the British Steel Corporation will be hoping to make a profit next year. Shotton is currently making a profit. Therefore, it seems to me and to many steel workers inconceivable that its future should be in doubt.
My final question to the Minister for Industry is to ask whether he can confirm that profitability and viability are still among the Government's principal factors in deciding what to do in the steel industry.

8.15 p.m.

Mr. John Sutcliffe: Mr. John Sutcliffe (Middlesbrough, West) rose——

Mr. Lawson: On a point of order, Mr. Deputy-Speaker. I have not seen the hon. Member for Middlesbrough, West (Mr. Sutcliffe) on the Government side at all today. I notice that he has been given a sheet of notes which he has been memorising or reading. I do not know whether he has any steel interests. In view of what Mr. Speaker said about the interests of hon. Members with steel constituencies, may I ask whether you, Mr. Deputy-Speaker, should be induced to aid and abet a practice which is definitely aimed at gagging hon. Members on this side of the House who have steel interests?

Mr. Deputy Speaker (Mr. E. L. Mallalieu): That is not a point of order, as the hon. Member well knows. He is taking up most valuable time in the debate which many hon. Members wish to occupy and use. Mr. Sutcliffe.

Mr. Lawson: Further to that point of order——

Mr. Deputy Speaker: I have ruled that it is not a point of order.

Mr. Tinn: On a point of order——

Mr. Deputy Speaker: Is this a new point of order?

Mr. Tinn: This is a new point of order, Mr. Deputy Speaker. I recall that in a previous Parliament Mr. Speaker ruled on several occasions when there was a strong predominance of Opposition Members wishing to speak and a great shortage of Government supporters—there could hardly be a greater shortage at the moment with only two hon. Gentlemen present on the Government side—that in such circumstances, instead of calling one for one, he occasionally called an additional speaker from the Opposition side. We, then on the Government side, rather resented it but perhaps there is something to be said for it.

Mr. Deputy Speaker: It is true that there are occasions when, in the discretion of the Chair, immediate regularity is not followed. However, on this occasion I hope hon. Members will accept that occupants of the Chair do their best to be fair. Mr. Sutcliffe.

Mr. Lawson: On a point of order. You have talked about the discretion of the Chair, Mr. Deputy Speaker. This is precisely the point I am putting: that you


are permitting the practices of the House to be abused in this sense when so many hon. Members with steel interests have been here all day.

Mr. Deputy Speaker: I do not think so. If the hon. Member feels that I have been unfair, he has his remedy. I hope that on the whole hon. Members will regard the Chair as being completely impartial on all occasions.

Mr. Lawson: Not on this occasion.

Mr. Sutcliffe: I apologise to hon. Members that I was not in the House this afternoon and have not listened to the major part of the debate. [Interruption] As hon. Members know, from time to time Members are prevented from listening to debates in which they have a particular point to make.
I wish to be brief, and I mean that. Hon. Members may have read the correspondence on "Looking glass words" in The Times. Many of us start by saying that we intend to be brief and then tend to encroach upon eternity. I do not intend to do that.
I hope that hon. Gentlemen opposite will accept that I have an interest in steel. I represent part of Teesside. The hon. Member for Cleveland (Mr. Tinn) has Redcar in his constituency. All of us on Teesside are interested in the possibility—we hope the probability—of the British Steel Corporation investing in a brown field site, at any rate, in Redcar.
I wish to put a specific question on the subject of the British Steel Corporation's investment programme. The Corporation has what it calls certain strategic development options open to it in relation to whether its capital investment programme should include the brown field site I have just mentioned or, perhaps, a green field site—which now seems unlikelyx2014;and, generally, as to where its investment should go. One appreciates that the work involved in assessing major investment projects is inevitably complex and time-consuming, the studies involved, which may lead to the expenditure of large sums of public money, calling for the greatest care and thoroughness.
Is my hon. Friend the Minister for Industry satisfied that the Government have been receiving and are now receiving the information which they require in order to assess the British Steel Cor-

poration's investment recommendations which they will receive in due course? Unlike my hon. Friend the Member for Cheadle (Mr. Normanton), although I agree when he recommends that the Corporation should have the greatest freedom in this matter, I recognise that on the question of the major capital programme for British steel the Government will have a large say not only on the social and regional costings but on production costings too.
For months now the British Steel Corporation will have been working on these costings and deciding its investment policy. If it is not making available to the Government now information on which such costings are based, the Government cannot hope to digest and analyse the immense amount of material which it will be necessary to consider on completion of the Corporation's study.
If, as I have good reason to suspect, the Government are not being fed with the material necessary for themselves to make a parallel study of the investment options, I take a gloomy view of their ability to check, assess and pronounce upon the Corporation's recommendations when they are received and to come to a decision on them before the end of this year.
This is a matter of concern to those of us who represent such an area as Teesside where, as the Minister knows, thousands of steel workers have been made redundant, some of them recently, many of them being older men who are not likely to find alternative employment and who are not easily adapted to retraining. For these men, if there is to be a brown field site—at Redcar we hope—an urgent Government decision on where it is to be is imperative.
I should greatly appreciate it if the Minister could tell us in replying to the debate to what extent information has been and is forthcoming from the British Steel Corporation, reassure me that a parallel study is being carried out, and state clearly that when the Corporation's recommendations are made a decision will not be delayed.

8.24 p.m.

Mr. W. T. Williams: The hon. Member for Middlesbrough, West (Mr. Sutcliffe) will, I know, forgive me if I do not pursue the matter which,


coming in late as he did, he has just raised. I am sure he will understand the feelings of those of us who sit throughout a debate of this kind only to discover that at a very late stage an hon. Member comes in and addresses the Minister on a matter wholly outside the ambit of the debate which the House is conducting.

Mr. Sutcliffe: Mr. Sutcliffe indicated dissent

Mr. Williams: Perhaps the hon. Gentleman will listen a moment. The reality is that the Minister's statement on 8th May, in so far as it meant anything, meant that there is to be no brown field and no green field scheme in the coming years.
Having delayed so long, the Minister, in making what one might almost call his non-statement, did little more than tell us in effect that the Government, having twisted the British Steel Corporation's arm, intend to ensure that over the next four years at least and possibly over the next 10 years there will be no increase whatever in the industry's productivity.
We are already producing 27 million or 28 million ingot tons. The Government have said that the proposal for the next 10 years shall be for a figure between 28 million and 36 million ingot tons. My hon. Friend the Member for Chesterfield (Mr. Varley) said that the reality of the matter was that the 36 million represented the optimistic view of the British Steel Corporation and the 28 million was the more realistic view of the Government. The Minister for Industry made no attempt to deny that. Therefore, one can only conclude that his statement is to be regarded as of greater interest not for what he said but for what he did not say.
The hon. Member for Sheffield, Hallam (Mr. J. H. Osborn), albeit unwittingly, put his finger on the point which is the real question at issue between the parties in this debate, for he said that the reasons for the Government's policy decisions in this matter have not been declared to us. The Minister has persisted in refusing to give information about the Government's proposals over the next 10 years for the industry. We have waited a long time for evidence from the Government of the strategic plan, and they are refusing to tell us. Neither in the statement of

8th May nor in his speech today did the Minister tell us the Government's intentions for the industry's future. He did not illuminate the path ahead by a single candlepower.
As has been rightly stated in the Motion put down by the Opposition the result has done a great deal to demoralise the industry, for it is very troubled and distressed about its future. Surely the industry is entitled to be told, whether the news be good or bad, about the matters on which the Government are determined. At the moment the position appears to be that the Government are saying "We will, over the next 10 years, have a steel industry which will produce 28 million ingot tons and we may have an industry which will produce 36 million ingot tons but we will not declare the reasons for that decision and nor will we say how that production is to be distributed over the country".

Mr. Tom Boardman: Just so that I can clear the point which the hon. and learned Member is making, is he saying that it is for the Government and not for the British Steel Corporation to submit plans about where the industry should be distributed and where the plants should be built?

Mr. Williams: I am not precisely saying that, although I am not saying anything very different from it. The Government have set up the Joint Steering Committee which consists of members of the Government, advisers to the industry and members of the industry. The Committee presented to the House on 8th May through the Minister's mouth a statement on the industry's future, but a statement which gave no information. It gave a variant of as much as 8 million tons in steel production, and in my submission it would have been right for the Minister to have said what was the long-term plan for the industry. The workers in the industry are entitled to that and in failing to provide it he is failing in one of the cardinal duties of his office.
The results of it are to be seen in the industry itself. I do not wish to make particular constituency points except as an illustrator of perhaps what is a microcosm of the state of the whole industry. The position in my constituency is that because of the Government's failure or the failure of the Steel Corporation to


make plain what is the long-term future, the whole of the town is buzzing with rumour. We already have over us the shadow of the closure of Irlam. People come to me continually and say that they are threatened with redundancies. They are subject to redundancies but no explanations are given them and there is short-time working. There are closures such as in Dallam. And yet in the face of these happenings no attempt is made to explain to those people who are the backbone of the industry what is proposed or what is intended for the future of the Warrington plant.
All this has given rise to a situation which in Warrington at least is entirely without parallel in a town with over a hundred years connection with the steel industry.
We have a situation in industrial relations in Warrington which is completely different from anything that has been known in the town before. I have a letter which was written by 250 of the people who are working in the Rylands White Cross plant in Warrington who say that they are now in a situation in which the maintenance workers are outside the plant and can see their own staff clerks doing their work. As a result this is causing people who have worked together for nearly a lifetime to become bitter enemies. The letter says:
We have had the police brought about our necks with fantastic stories of violence and intimidation, and hence a deterioration of the situation and industrial relations hitting an all time low. What most of us cannot get over is the reluctance of top level management to discuss anything with us. For instance, management have never seen our representatives and it is impossible for us to know what is going on within the industry in our own town".
It finishes by saying
Is this good industrial relations?
I use that only as an example, and accept that it is an extreme example. But where no attempt is made to explain to the people most vitally affected what is the long-term project and what their future is, it is to be expected that industrial relations will increasingly deteriorate.
In 1971 we were already talking about 40 million tons in 10 years, when we were even then producing 27 million tons. Now the Steering Committee report talks about production limited to 36 million tons at the very outside, though one of

my hon. Friends has given a lower figure as being that which the Government regard as the more realistic. Whatever else it means, that does not fit into the Government's continuing assertion that they are determined to achieve a dynamic growth in our economy. Even allowing for the decrease in the intensity of steel user, our entry into the Common Market demands that an honest estimate be given of the steel needs of British producers during the late 1970s and early 1980s.
We are given the feeling that, in reality, what underlies the Government's refusal to state their strategic plan is that they have made a plan, perhaps as a result of their discussions within the Steering Committee, which they are not yet prepared to declare to the country. The industry's anxieties, particularly in the regions, including the North-West, arises from the fact that the Common Market Commission in 1970 announced that the accepted standards of production by any one national group should be 12 per cent. to 13 per cent. of the total output, to avoid distorting the pattern written into the Treaty of Paris which gave rise to the European Steel and Coal Community. The Government's failure to discuss with the trade unions must also underline the suspicion that has already been voiced that the Government's real intention is to run the industry down so that it can come within the standard limit of production laid down by the Commission, and for that purpose they are prepared, if need be, to sacrifice the regions. In order to satisfy that demand, should steel production in this country fall below the needs of industry and the economy generally, they are prepared and willing to buy steel from overseas producers.
If these things are true—and in view of the Government's unwillingness to be more forthcoming in these matters it seems that it is true—it is not surprising that there is unease throughout the industry, from Lord Melchett down to the people who work on the shop floor. It bodes ill not only for the steel industry, but for the whole country if this is typical and representative of the Government's incompetence. If the way in which they have left the industry demoralised and distressed is a picture of the way in which the Government handle their business, it is a grim portent, not only for them, but for us all.

8.39 p.m.

Mr. George Lawson: I might have been content, though not happy, if after 18 months, during which there has been a deep-seated, long-continuing study by experts in the steel industry and experts in finance and administration, we could have heard from the Government spokesman an indication that at least the problems raised so often on both sides of the House had been examined, and were being examined, and that attempts were being made to right the industry. I should have been ready to accept it if the Minister had said on behalf of the Government that some of the problems were problems they had not yet been able to answer.
Instead, the Minister gave us a statement which does not even throw us back to the position which existed after nationalisation. The development proposals for the industry after nationalisation were virtually the same as those contained in the Minister's statement today, certainly so far as Ravenscraig is concerned. We were told after nationalisation that there was to be a development of Ravenscraig to the extent of £50 million to £60 million. Today the figure is given as £55 million. Thus if we compare the value of the two proposed developments in real terms there is actually a reduction as compared with the earlier figure. But even accepting that there has been no such reduction, there certainly is to be no expansion on the earlier figure. Apart from certain modifications, today's plan is no more than was announced some years ago.
I appreciate the vast problems which face the nationalised steel industry. All manner of rumours have been current about a vast 8 million to 10 million ton steel complex green field site development. My hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) knows more about the industry than I do, but I would doubt whether even he could be sure that such a development, perhaps costing £1,500 million, is wise. The same is true of many other people who know a great deal about the industry.
But this is surely the sort of question which the joint steering group, with all its expertise, was supposed to be looking at. What did it come up with, however?

Nothing, as far as one can see. It did not come up with an answer. From a variety of sources we have suggestions for very much smaller works, viable with an output of 500,000 tons to 1 million tons. My hon. Friend the Member for Brightside has his doubts about that. One is always ready to listen to him on this matter, but I am not prepared to say that he can tell us the answer either.
These questions must be answered. The joint steering group was supposed to answer them. It would have been better if we had had a statement from the Minister that these were matters which must be studied by the Government and that they had not yet been resolved—that we had to decide in terms of having either efficient, smaller units, ensuring a continuance of the industry much as it is now, or a green field or brown field site such as that which has been suggested for Tees-side.
If any area is to produce 8 million tons of steel, a lot of other areas will be involved. We have to be dealt with honestly. I recognise that the industry has to find some answer, because otherwise we shall be worse off. We are getting 28 million tons, not 36 million tons. That is the gag. We were all convinced, not from our own findings but from the kind of evidence we have been given by Lord Melchett and others, that the industry was not being brought up to 40 millions tons plus. There was no green field site development.
My hon. Friends and I are prepared to judge the arguments but we are being insulted. All that we have been told is:
After careful review, the Group, which as the House will recall, included representatives both of Government Departments and of the British Steel Corporation, has reached the conclusion that the British Steel Corporation should, by 1980, aim at an increase in its capacity to a level within the range of 28 million to 36 million ingot tons."—[OFFICIAL REPORT, 8th May, 1972; Vol. 836, c. 909.]
It is to aim at the 28-million ton figure eight years from now.
The nation is being insulted to be told this. Let us recognise the difficulties and explain them. Let us say we cannot answer these questions at this stage. We must look after our respective interests, and my hat is certainly in the ring if the interests of Scotland are to be sacrificed on the basis of chance with no knowledge


of what is happening. I am not arguing about green fields but the position in Scotland is that we have a lopsided industry with a great deal of outmoded steel-making capacity.
We have something like 34 open hearth furnaces and the experts agree that that type of furnace is now out. While we have a bad mix in terms of steel-making capacity we are well equipped with finishing capacity. Our great fear in Scotland—and it is a fear in the other areas too—is that we will be confronted by a decision of the Corporation to bring up, perhaps from Lakenby or Scunthorpe, something like half a million tons of crude steel or slab steel to be rolled and finished in the Scottish mills. We know what would happen then. Very quickly we would find that when the mills needed replacing they would be replaced in the South and the Scottish industry would be virtually eliminated. There would be bits and pieces here and there but it would be virtually eliminated. What I and my hon. Friends say is that at this stage the crucial point is that where steel-making capacity goes out in Scotland it must be replaced in Scotland with at least as much as went out. There can be no thought of our taking imports from the South. That could only be temporary and would destroy us.
I am not begging for an area which is crippled or which cannot make a great contribution to the nation. I have supported entry into Europe. I still support entry into Europe. One of my arguments for entry is that we in this industrial belt of Scotland are well located for export purposes. We are between the Atlantic and the North Sea. We can reach easily into the well-populated centres of Northern Europe and across the Atlantic. It is significant that the one product, apart from whisky, whose export has been increasing in leaps and bounds from the Clyde port is steel and iron production. There has been a considerable increase even in the last year, which has not been a good year for steel production.
This area is capable of considerable development. It has much to contribute. The Government would greatly lessen the hostility of some of my hon. Friends to entry to Europe if they would agree with my view about the ports on both sides of this industrial belt. This short stretch

of country, less than 40 miles across in places, is one of the best areas we have.
The hon. Member for New Forest (Mr. Patrick McNair-Wilson) said that the Government were being realists and facing facts in talking in terms of a steel output of 28 million tons. He talked in terms which suggested that Britain could not possibly face the competition of Germany or of other European countries or Japan. I do not agree. I see no reason why we in Britain cannot produce steel as well and as cheaply as Germany can. Germany has many disadvantages which we do not have. It has to bring in the bulk of its material from around the world. That applies to most European countries. We have advantages in this respect over those European countries.
This very cautious, facing-the-facts line and not taking a decision until one is absolutely certain, coming from Tory businessmen, astonishes me. I thought there was supposed to be a readiness among businessmen to take calculated risks. We have not had a murmur about calculated risks from hon. Members opposite tonight. We have not heard a word about boldness. Yet we are as capable as any other people. That is the spirit I want to see engendered.
If Scotland loses steel capacity, it must be replaced. We must have new capacity to ensure that our part of the industry is as efficient as that in any other part of Britain or, we hope, in any other part of the world.

8.55 p.m.

Mr. Donald Coleman: My hon. Friend the Member for Motherwell (Mr. Lawson) has rightly stressed the importance of bringing to the notice of the House the needs of the steel localities. Had I sufficient time I could speak at length of the apprehensions and worries of the steel workers in Port Talbot which lies in the constituency of my right hon. Friend the Member for Aberavon (Mr. John Morris). People living in my constituency and in the constituencies of my hon. Friends the Members for Ogmore (Mr. Padley) and Swansea, East (Mr. McBride) are also employed in the Port Talbot works. In recent long and searching discussions the steel workers of Port Talbot told us of their apprehensions and concerns about the future.
The Motion before the House deplores the Government's performance in respect of the steel industry, which gives no guarantee that the British steel industry will expand. It says that uncertainty is created within the BSC, that fears are aroused about the employment prospects of workers in the industry and, because of all this, the Government are placing in jeopardy our balance of payments position. As a member of the largest trade union in the industry—the Iron and Steel Trades Confederation—I speak for the workers in that industry and of their fears, apprehensions and frustrations.
From the moment the Government came into office the steel industry found itself in the grip of uncertainty. First there were the fears which arose from the Selsdon Park exercise which was engaged in by the Conservative Party. When the Conservative Party came to an understanding that the steel industry would remain in public ownership it perpetrated upon the industry other causes for uncertainty. There was the hiving-off idea, which is still being pursued but does not placate the bold, free entrepreneurs on the Government benches. Other action was required and the BSC was refused the price increase which was so vital to it.
After all this agony came the decision to probe the industry through the setting up of the joint steering committee, a device which has meant more delay and more uncertainty for those who manage the industry and those who work in it. This has led to a spate of rumours and speculation which has done the industry more harm than good.
A lot has been said in the debate today about green field and brown field sites. Much of this talk is alien to the people who understand what goes on in steel plants and what is required from the steel industry. A recent statement from the Minister about levels of expenditure brought glee and congratulations from hon. Gentlemen on the Government side of the House, but at the end of the day in the 1980s the industry will have a capacity of only one million tons a year more than it has now. In other words the industry will he running like the devil only to keep up with itself. I ask the Minister whether this is part of the

price that has to be paid as a result of the Common Market negotiations of the Chancellor of the Duchy of Lancaster. That is a question which is being asked in the British steel industry.
As has been reiterated throughout the debate, we ask the Government to get off the back of the British Steel Corporation and allow it to do the job for which it was set up, which is to run the steel industry for the nation.

9.0 p.m.

Mr. John Morris: It is beyond dispute that we are now discussing the fate and prosperity not only of the 250,000 men employed in the industry, but also of all those who are dependent upon them, the greengrocer and the candlestick-maker, since these are closely knit comumnities. I have the honour to represent one of those communities, and I know how closely the people there are watching the Government's announcements and our deliberations here today.
My hon. Friends and hon. Gentlemen opposite have every right to be anxious and to demand much greater detail than has been forthcoming either today or in the Minister's earlier statement. There has been concern about Irlam and about Consett. There has been demand for more details by my hon. Friend the Member for Rutherglen (Mr. Gregor Mackenzie) and the hon. Member for Stoke-on-Trent, North (Mr. Forrester) and a number of my hon. Friends have expressed their concern about Shelton. Anxieties have been expressed by the two hon. Members for both parts of Flintshire and also by my hon. Friend the Member for Warrington (Mr. W. T. Williams). Had my hon. Friend the Member for Midlothian (Mr. Eadie) and others of my hon. Friends, who have been anxious to take part in this debate, been given the opportunity to do so, they would have sought to discover from the Minister something which they have every right to know—and which they have not been told either in this debate or in the Minister's statement the other day—namely, what lies in store for the industry.
Since 18th June, 1970, the industry has been bedevilled by Government intervention. Our great hope was that the long delayed announcement would mark the end of the road of Government intervention in the way in which it has been


practised in the last two years and that the curtain would some down on that stage. But it was not to be, as we discovered from the Minister only a week or so ago.
The whole story began with the Secretary of State's famous speech at the Tory Party Conference in 1970 when he told the delegates of the doctrine of disengagement in the industry, as in everything else, and in particular in the steel industry. That was sweet music to the delegates. The whole of yesterday's debate perhaps gave a clue to the success in other fields but certainly as regards the steel industry the story of disengagement was a complete fiction from start to finish We have not had disengagement, but rather a series of studies one after the other—at least four and maybe more, if one includes the pricing exercise of the Common Market.
First, we had the urgent and immediate concern about current projects when everything stopped and then there was a period of "go" and a great deal of additional expense. Secondly, there was denationalisation, hiving off, the BP exercise and all that, as a result of which the Secretary of State came to the House and disclosed the concern of his supporters that the bulk of steel, despite the protests of all those who had fought against public ownership of the industry, would remain in the hands of the nation.
Then last year we had the price squabble when the Secretary of State got Lord Melchett, just like the Duke of York, to march his troops up the hill, then told him to put up the price and, when he did so, the Prime Minister told him he could not do so and eventually he was allowed only half. Is that a policy of disengagement?
Lastly, we had the Joint Steering Group. From this we undoubtedly had great expectations, but like many such expectations they were not forthcoming. We were told about this first on 18th March last year when the Secretary of State confided to the House that he had arranged for what he called a very "deep-seated review." Indeed by 24th May he was able to give in the House some details of that deep-seated review.
The right hon. Gentleman said first of all that the long-term review would be "difficult, ambitious and complex".

Secondly, he said that it would require a "very great effort". He was confident that he would have the results by the end of the year. The right hon. Gentleman is a wonderful man for providing us with apt descriptions of what he thinks is going on. He said that it would be a "mammoth task to perform".
Then we had the details, looking at expansion at home, including the principle of a major new green field site, the provision of supplies to the Corporation of raw materials, the assessment of the desirability of producing some part of the article elsewhere, and then he said that the study would deal with the "manpower consequences" of alternative solutions. No wonder hon. Members on all sides of the House were anxious. There was no mention in the Minister's statement of anything to do with a great part of these aims, and certainly as regards manpower consequences we had not one word either in the Minister's statement last week or in the debate today. Those were the great expectations, and it is not surprising that those of us who are concerned passionately with the steel industry are deeply disappointed with the statement. We regard the Minister's statement last week as pitifully inadequate.
The position is summed up by the Financial Times:
The Government's review of the British Steel Corporation's future development strategy has produced a very small mouse after so long a period of gestation.…It is difficult to see what the joint review has really achieved.
That is the condemnation of what we were told by the Minister a week ago last Monday. He has not added one word to the position in today's debate. Perhaps it would be unkind to compare the description by the Financial Times with what the small boy said when he discovered that the emperor had no clothes. That is the situation, and these are the missing links about which we are entitled to be told.
Where is the issue of the green field site canvassed in the course of the Minister's short statement? So far as we know, we cannot have expectations either of a green field site, a brown field site or, as the Economist put it,
even a sky blue pink site
from his statement. Yet the right hon. Gentleman is able to say that no decision has yet been made about a brown field or a green field site. If he believes that, he


will believe anything. On the basis of the assessments which have been made by the Minister of a broad strategy aiming to produce between 28 million ingot tons and 36 million ingot tons by 1980, it is clear that a green field site is out of the window.
Where is the evidence that this has been a difficult, ambitious and complex task? All we have is a statement which has appeared after all these months of waiting—we were promised a statement at the end of the year and we have had to wait until May—from which it is clear that all the major decisions have been shelved and that the Government have prolonged the uncertainty.
In passing, I want to comment on the way the statement has been drafted, because I do not give any marks to whoever was responsible. First, we have the mention of the approval of the current year's financial investment. That does not come from the joint steering committee. It is past history. Then we have the mention of the provisional approval of £200 million for 1973–74.
The claim was made during the debate about how much better this was than in our term of office. I had a small part to play in the early days of preparing for public ownership. Anyone with any knowledge of the industry knows that after 1967 it began from scratch. It began on the basis of no corporate plan to invest. As my right hon. Friend the Member for Newton (Mr. Frederick Lee) said, there has never been any suggestion that in the years after 1967, while we were still in office, this great industry was at any time starved of capital. Today is the first time that we have heard it, and this is perhaps a cliché to bolster the Government's case for what they are seeking to do.
Let us for a moment examine this figure of £200 million for 1973–74. I welcome this provisional approval. I represent one of the constituencies which are mentioned. It was said by the late Iain Macleod on one occasion that the Minister was posing as Santa Claus and one should never shoot Santa Claus, even if he had only one leg. We have to examine the body of this Santa Claus.
We have here a figure of £200 million for 1973–74. Of that, £80 million has

already been approved. That is the figure which I have received from the Corporation, which means that there is only £120 million of new money not approved.

Mr. Tom Boardman: I made it clear this afternoon, as it was made clear in the statement, that this was approval on account.

Mr. Morris: The hon. Gentleman has misunderstood me. I am not saying that this is anything more than approval on account, but I am going on to say that of this approval on account of £200 million, £80 million has already been approved and the only additional money is £120 million. When the Minister reads my statement he will realise that there is no disparity between what I have said and the position of the corporation. The Government should not try to mislead the House as they have sought to do in this statement.
Let me go on as quickly as I can—[HON. MEMBERS: "Hear, hear."] The Minister is not anxious for me to deal with a prospectus which is not wholly fair and frank. He will be told about these matters in a moment. For some reason or other we have been told where the major investment is taking place, not for the future, but going right back to 1970, and the figures range from those for 1970 to those for 1974. The figures for three of those years are for past expenditure, and the figure for only one year represents expenditure for the future. The total sum is £570 million.
Pangs of jealousy were felt in many parts of the country on learning of some of the places listed as receiving assistance, but let me examine some of the figures. For Llanwern there is a total of £90 million, but of that £80 million has already been approved, which means that there is only £10 million of new money to come. We are very much better off at Port Talbot. Perhaps this is due to the efforts of the local authorities, the works council and my colleagues in the House. Of the total of £45 million, £20 million has already been approved, which means that £25 million is new money.
We were envious of the total of £250 million for Scunthorpe, but of that sum £240 million—all but £10 million—has already been approved. Of the £130 million for South Teesside, half has been


approved. Of the £55 million for Ravenscraig, £30 million has been approved. In the provincial Press those totals caught the headlines, but in the cold glare of day they sound very different from what the Minister sought to put before the House. We are told that the Minister has a great deal of financial expertise and a knowledge of the finance of industry. But I hope very much that when he next has the privilege of making such a statement, he will consider whether it is this kind of prospectus that he would put forward for private industry. Has there here been an attempt, unwittingly perhaps—I may be too charitable—to try to baffle the steel industry and the constituencies?
My quarrel with the report is what is contained in three or four lines. All the information that we have is that the Joint Steering Group has come to the conclusion—and this is approved by the Government—that the industry should by 1980 aim at an increase in its capacity to a level within the range of 28 million to 36 million ingot tons. In the Minister's statement, the one handed out, we are told that the British Steel Corporation agrees with that. But it was only after the Minister was questioned that he thought it fit and right to put the gloss on the statement he had made, the only statement of his original remarks, by saying that the Corporation veered towards the top end of the bracket, but that it accepted the forecast that has been put forward. Only then did he think fit to add that. What does the House think of this poor, veering Corporation, punch-drunk after the exhortations of study after study, and grasping this lifeline like a condemned criminal reprieved on condition that he serves a light sentence?
On 19th March of this year, weeks before the Minister's statement, we were warned by the Sunday Times:
The possibility of a zero growth steel industry for Britain is the shock proposal which Industrial Secretary John Davies will put before the Commons within the next few days.
That newspaper was wrong. We did not have it in the next few days but had to wait almost two months, and the Secretary of State did not come to the House to make the statement. If I may coin a phrase, he ducked it. He has also ducked today's debate. He is the man

responsible for setting up the Joint Steering Group. It is he who should be answering the debate tonight.
The Sunday Times anticipated that
The bottom of the range will be close to the 30 million ton mark, representing barely any increase at all from present day capacity.
The Sunday Times was far too optimistic, because the figure at the bottom of the range is 28 million tons. So far as it can be ascertained—there is no fine art in this—present capacity is about 27 million tons. We are told that is all right because this is a realistic assessment. Is it not better to be realistic and, as my hon. Friend the Member for Flint, East (Mr. Barry Jones) said, better to aim for a realistic assessment?
But what confidence can the House have in an estimate which has a range of 25 per cent., with the bottom end a mere 28 million tons, and this to be achieved over a period of eight years from now? That is merely 1 million tons from the present capacity of the industry. The top of the range is only 25 per cent. higher. What confidence can there be about that? If we were told how the Steering Group achieved this basis, perhaps we could have had a much better and more informed discussion today, but we have been denied that information. All we are told is contained in the bare lines in the Minister's statement, which are not even sentences.
Much more important than our deliberations is that the prolongation of this uncertainty will cause the good will of the steel workers—they are the most important people of all—to be put at risk, and any trust that remains will certainly be at risk. Those workers have experience of redundancy after redundancy over the years. They know that in the years that lie ahead there are yet more redundancies to come. It makes their future so much easier when they know, first, that there is an efficient and proper policy to bring new and vital industry to those areas and, second, that if redundancies are to take place they will take place against a background of rapid and substantial expansion. In that atmosphere it is so much easier to persuade any workforce that there is a credible policy which can carry the confidence of the workers.
It is perhaps a trite saying that the industry has had a cyclical pattern, but


over the years all of us who have taken part in debates—in my case over the last 13 years—have experienced, discussed and debated this matter. It was the Secretary of State who said on 24th May, 1971, that the industry moved in rather large bounds. Unfortunately they are not always bounds forward but are bounds in the same place. They share some of the characteristics of a rocking horse; there is the illusion of movement but not real advance. There should be the confidence to invest in the national interest if the industry is to meet the inevitable demands of the future—we are told there will be demands and dynamism after our entry to Europe—and the industry should be prepared for whatever situation may arise.
Recent years are littered with examples of the part that iron and steel imports have played in every balance of payments crisis. In 1955 our deficit on current account was £313 million and iron and steel imports were £99 million. In 1960 the deficit was £255 million and imports were £101 million. In 1964 the deficit was £376 million and imports were £106 million. In 1967 there was a £298 million deficit and imports were £120 million. That is the past situation and I am confident that it will be repeated time after time. A lesson we should have learned is that the imports of iron and steel products in crisis years have amounted to one-third to one-half of the balance of payments deficit current account. These are articles which are produced in this country. Imports in 1955–56, 1960 and 1964 contained between £40 million and £80 million of what could be called extra steel blooms, billets, bars and notably sheet to supplement domestic capacity. Those are the lessons that I thought we had learned from the past.
Many strictures have been said about the joint steering group. My right hon. Friend the Member for Newton asked on what basis it had been set up. Other hon. Members have commented that it is a constitutional monstrosity. However, there are respectable precedents for having a body of this kind. I had the privilege of chairing one of these steering groups for the railway industry. We set out our conclusions in 60 pages or more in a White Paper which was placed before

the House and was debated. The whole exercise was chaired by a Minister.
There are good reasons from time to time for carrying out such an exercise where there is serious concern within the industry, where there is need by a Government Department to know the condition of the patient and perhaps the need to weedle the industry to accept particular medicine from a Government. But if there is to be this departure from responsibilities it must be on a temporary basis, and the sooner this kind of machinery is out of the hair of the British Steel Corporation the better.
Those responsible for the industry and the Statute—I checked it this afternoon to refamiliarise myself with the details of the Act—are the industry and, charged with specific responsibilities delineated in the Act, the Minister. With a body of this kind in existence year after year, we blur the edges of responsibility, we fudge the responsibilities, and there is an alibi for both sides if anything turns out contrary to expectations.
On 24th May the Secretary of State said:
I am anxious to disengage from excessive involvement in the management problems of the Corporation."—[OFFICIAL REPORT, 24th May, 1971; Vol. 818, c. 76.]
Then on 16th December, 1971, the Under-Secretary of State, who is no longer a member of the Government, said:
By definition, if the report is in my right hon. Friend's hands, the work of the steering group comes to an end and there is no change from the original position."—[OFFICIAL REPORT, 16th December, 1971; Vol. 828, c. 973.]
There it is. I hope that from the Under-Secretary's speech tonight will emerge a firm, clear and unequivocal statement about when this joint steering group is coming to an end. I think we are entitled to know.
I again quote from the Financial Times:
It is at this stage that the joint review, instead of being a relatively harmless exercise, could become positively harmful to the industry.
What are the real reasons for the necessary investment being denied to the industry? There is no time to go into Lord Melchett's plans, but the Sunday Times said "Government slashes Melchett's plans." Indeed, it perhaps stems from the article in the Economist which suggested that it would be so much better


to import from a lower-wage country like Japan rather than produce in the United Kingdom. We know that expenditure on the public sector is contrary to the whole philosophy of the Government.
Lastly, the reason why the stop date on any determination by the Government is 1974 may be the possibility of our entry into the Common Market. We know that the Steel Corporation's production is 50 per cent. more than that of its nearest EEC producer. The point was put last year in an official answer by the Commission to a Dutch Member of Parliament stating that
State monopolies are incompatible with the goals of the Common Market and should be modified.
We have been told time after time by the Chancellor of the Duchy of Lancaster that the size and status of the steel industry is not in question. It is very much above the 13 per cent. size advocated by the ECSC. Whatever may be the position about the present size and status of the industry, we want to know about the future. Is it because there is a bar to future investment that the Government cannot give any definite announcement to the House that they are in a position to give approval to what will be needed after 1974? I remind the House—this may be the real truth why there is a stop date in 1974—of the document of 4th May of the Common Market in which it was said that
The British Government's existing powers to control BSC investment programmes will"—
after entry into the Common Market—
be subject to the overriding authority of the Community.
That is perhaps the real reason why the Government are unable to tell us anything about what will happen after 1974.
The Government have lost the opportunity of ending uncertainty, of giving a message of confidence to the steel communities and of protecting the future trading position of this country. The industry's management and work force have a proud record and a high degree of partnership and skill. As one hon. Member has said, time is not on the Corporation's side.
We are wholly dissatisfied with the mouse which emerged from the Minister's statement last Monday and with his pathetic speech today. I invite my right hon. and hon. Friends to vote for the Motion.

9.30 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Peter Emery): I am sure that in the minds of all right hon. and hon. Members who have been here, this will be regarded as having been an interesting and useful debate. Obviously, the subject has been of considerable concern to those hon. Members who have taken part, and it is of no less concern to the tens of thousands of people whose daily lives are intimately tied to or allied with our great steel industry.
I shall deal, first, with the major points which have been raised, and thereafter I shall regard it as my duty to turn to the many individual issues raised by hon. Members with constituency interests. Before going further, however, I must make it patently clear, so that there may be no doubt in anyone's mind, that the Government want, and will do all in their power to achieve, a strong, profitable and internationally competitive steel industry. How this could ever be in question is beyond me. I reaffirm the Government's support for our steel industry at the start of my speech only because of the many doubts which have been raised by hon. Members opposite, to no benefit of the industry itself, which, if allowed to go unanswered, would be damaging to our long-term interest in the production of iron and steel.
I regard it as one of my main duties—I know that this is the view also of my hon. Friend the Minister for Industry—to do everything within my power to work for the successful modernisation of the iron and steel industry within the United Kingdom, an industry which, whether or not it be the springboard, is certainly a vital support of our economic growth, an industry which is able to hold its own and be competitive within world markets, an industry which is strong and economically viable.
One of the cornerstones, I accept at once, is investment—the level of modernisation and the ability of the industry to produce steel products at prices and in quantities which will meet and beat European and international competition. We come here to the first enigma: how do we predict the future level of demand, since investment in new plant, whether green field, brown field or heritage expansion, will be a drudge to the industry if the products do not meet


the demands of the market? Thus, the relationship between investment and demand is of the first importance.
In this context, I find some of the comments of hon. Members opposite difficult to follow. They criticise the decisions of the Joint Steering Group in the range band 28–36 million tons. But if one were setting out from scratch to prepare a forecast for the industry, where would one look for advice? Obviously, one would go to the British Steel Corporation. One might call in consultants to review the overall market demand as it may be in the rest of the world. One would want information from industry, and also from the Treasury in considering the economic climate for overall industrial expansion. Moreover, one would probably want the views of the sponsoring Ministry.
That is precisely what happened through the creation and work of the Joint Steering Group. I find the attitude of the right hon. Member for Aberavon (Mr. John Morris) very strange when he says that advice, unless it comes from a committee chaired by a Minister, is not acceptable. In most places outside the House, advice from a source not chaired by a Minister would be much more acceptable to many people. [Interruption.] It is all very well for the Opposition Front Bench to say that this was not said, but great play was made of the point and the right hon. Gentleman said that it was fudging the responsibility to take such advice if it came from a source which was not chaired by a Minister. I do not take that view.
I will come specifically to the position which concerned the publication of the report. The hon. Member for Chesterfield (Mr. Varley) stressed this issue and a number of other hon. Members have also referred to it. It is important for us to realise that the Joint Steering Group report is confidential advice to Ministers. There are two reasons why it is not in the interests of the industry to publish the report. Hon. Members opposite may scoff but let them listen to the reasons and judge for themselves.

Mr. Michael Foot: Mr. Michael Foot rose——

Mr. Emery: May I finish my statement and then I will be delighted to give way. The report contains such material of a

commercial confidential nature that publication would damage the commercial interests of the Corporation by revealing plans and expectations to competitors. It is important that Ministers must retain the right to receive the most confidenial information from experts with no punches pulled and with no fear of subsequent publication. [Interruption.]

Mr. Foot: We are asking for the figures about imports in particular and about other matters that were available to the Joint Steering Group, which we wanted made available to the House of Commons. We were given an absolute pledge by the Secretary of State that the Joint Steering Group would be brought to an end. The right hon. Gentleman wanted it brought to an end. Will he tell us, since he is apparently jeering at the views of the Opposition on this matter, whether the Corporation is in favour of the Joint Steering Group being brought to an end?

Mr. Emery: The Joint Steering Group was set up to do a specific job and when that job was completed it finished. It has now been stood down absolutely and completely.

Mr. John Morris: That is not what the Minister said.

Mr. Emery: It is exactly what my hon. Friend said. It is quite clear that the British Steel Corporation co-operated in the work of the Group and was happy to co-operate on it. The Corporation agreed on the ratio of ingot steel production.

Mr. Foot: Let us get this absolutely clear so that there is no doubt. Has the Joint Steering Group come to an end completely? That is what the Minister has just said. Will there be no intervention from that group? Is that the message we can give to the Steel Corporation on this matter? Is that what the Under-Secretary is saying?

Mr. Emery: The hon. Gentleman is obviously unwilling to listen to what I said. The answers to the three questions he put to me are "Yes, yes, yes". There is no doubt in anybody's mind, least of all the Corporation's mind, that the Joint Steering Group was not to continue afterwards. The Corporation participated in it and was there all the time. The idea that the BSC was ranged on one side and


the Joint Steering Group was ranged on the other is absolutely untrue.

Mr. Morris: We should clarify the situation. We are now told that the Joint Steering Group has come to an end. If that is the case, why could not the Minister say so when he made his statement on Monday, because he was asked and he replied:
The hon. Gentleman asked whether the Joint Steering Group was now set down. As I said in my statement, we are now waiting for the British Steel Corporation to bring forward its strategic plans …."—[OFFICIAL REPORT, 8th May, 1972; Vol. 836, c. 911–2.]
Why could he not say so on Monday?

Mr. Emery: He is quite able to give whatever answer he wishes to the question. The important matter is what will happen as a result of the Joint Steering Group. There is nothing in the statement to deny what I said, as the right hon. Gentleman suggested from a sedentary position. That is absolutely untrue.
I wish to deal next with the point about flexibility within the forecast figures. The hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) made a well-thought-out and reasonable speech. I do not say that I agree with it all, but it was the only speech from the Opposition that tried to look at the whole situation and judge it from the point of view of the steel industry as a whole. The hon. Gentleman expressed concern about flexibility within the general levels that have been set. Some people have suggested that if the aims of my right hon. Friend the Chancellor's Budget come to fruition, which we now see an indication of, the JSG will in the figures that it has given understood what in fact might be necessary. I want to make it quite clear that within the range of figures announced there is a flexibility within the short term to deal with long-term forecasting. If it becomes apparent that demands will rise very much above the levels which we see this year, the flexibility exists within the industry—[Interruption.] It may be of no interest to Labour hon. Members, but it is of concern to British industry, which wants to know what the long-term situation is.
I turn to another matter raised by Labour hon. Members, the question of consultation with the TUC. It is stating the obvious to stress that Ministers attach major importance to consultation with

unions on Government policy for steel. The BSC of course keeps in close touch with the unions on planning issues, as on other matters. The TUC Steel Committee was specially set up to facilitate such consultation with all the unions concerned. My right hon. Friend the previous Minister for Industry met the TUC Steel Committee on 29th March and explained that he would welcome consultation with it after the statement of the JSG had been made. He said that the statement would be of a general character and would in no way pre-empt useful consultation. I cannot believe that any hon. Member would have considered it right for the Government to disclose the JSG statement to anyone before it was disclosed on the Floor of the House.
I turn next to a number of regional matters. I wish to deal specifically with some points raised by a number of Scottish hon. Members, and first the overall study the Corporation is carrying out orientated towards Scotland. The Corporation has made it clear that it will undertake to discuss the whole situation with the Scottish TUC. The BSC developments in Scotland at Ravenscraig and Clydesdale obviously ensure a continuing rule for Scottish steel. One-eighth of the 1972–73 improved investment programme, totalling £265 million, is being made in Scotland.
No one wants to hide the other side of the coin. It is true that closures will be associated with the programme, as older, uneconomic plant falls into disuse. But this is no different than anywhere else in the United Kingdom.
The hon. Member for Rutherglen (Mr. Gregor Mackenzie) asked questions particularly relating to his interest in Hunterston. I accept the problem of delay in local authority planning procedures. It should be remembered that in January the Corporation announced plans for its ore terminal at Hunterston, at an estimated cost of £26 million. Initially, this will handle ships of up to 250,000 tons but may be extended to handle ships of up to 350,000 tons. The first stage development will include a berth and jetty with unloading equipment, capable of handling 6,000 tons of ore an hour, and the adjacent stockyards will have a capacity of 1 million tons. The terminal in the first instance will serve the Corporation's works in Scotland but there is no


reason to believe that it will not be able to serve the Corporation's works in other parts of the United Kingdom as well as it comes further into operation. Further possible investment in Hunterston is specifically a matter for the Corporation.
A major conflict in the debate has been between the Opposition Front Bench and hon. Members on the back benches opposite. The Opposition Front Bench want the Government not to interfere with the Corporation, questioning what we are doing in carrying out the Joint Steering Group's report. But a number of hon. Members opposite have demanded that the Government should insist——

Mr. Michael Foot: Don't be silly.

Mr. Emery: The hon. Member for Ebbw Vale (Mr. Michael Foot) was not here, so I wish to the devil that he would not say, "Don't be silly". If he had attended the debate, that sort of interjection might have been more reasonable.
A number of hon. Members opposite have demanded that the Government should interfere in order to look after investment interests in their own areas. I can understand their views. It is important to get the situation in Wales clear. The hon. Member for Newport (Mr. Roy Hughes) was concerned about the possibility that the deep dock at Newport would not now go forward. He condemned the Government or somebody for not allowing this. But I heard no objection from the right hon. Member for Aberavon about this and no complaint that Port Talbot should be the centre for ore shipments by Llanwern works. At Llanwern, the situation is such that the shipment of ore from Port Talbot is likely to bring about a saving of about £4 million to Llanwern works by the modernised process.
I was intrigued to be told by the hon. Member for Chesterfield about despondency within the industry. I was at Llanwern on Friday and went through the plant. The trade union representatives were kind enough to have tea with me. [Interruption.] I have no doubt that they would have liked something stronger, as I would have. In the 45 minute conversation I had with them, there was not the slightest sign of despondency among the workers at the old Spencer Works. For the hon. Member

for Chesterfield to suggest despondency is not facing the facts.
In dealing with the problems of Newport, the hon. Member for Newport is specifically concerned about the possibility that over 1.000 jobs may be lost. I tell him that I fully understand the strength of local opinion, voiced by him and others, about the Newport Tube Works. Strong representations have been made to the Corporation and I know that hon. Members have been associated with them.
The genuine willingness of the Corporation to consult on these matters is proved by the striking fact that the Corporation has deferred the closure for six months to investigate the possibilities of alternative employment being more readily available. It would be wrong of the Government to interfere in these decisions of the Corporation and this is underlined by the actions of the Opposition when they were in Government in nationalising the industry. This is a major rationalisation project which the management of the company wishes to carry through.
I turn now to the question raised by the hon. Member for Flint, East (Mr. Barry Jones) and my hon. Friend the Member for Flint, West (Sir A. Meyer). The hon. Member has led a deputation to the Minister of State urging that the Corporation's replacement investment in iron and steel-making should be at Shot-ton. The reasonable and well-argued case put forward by my right hon. Friend is fully understood. I must point out that there is currently an investment of £25 million of new work already allocated to Shotton and any increase on this investment must be a matter for decision by the Corporation.
I come now to the point raised by my hon. Friend the Member for Manchester, Withington (Sir R. Cary) and the right hon. Member for Newton (Mr. Frederick Lee). All those who heard my hon. Friend will have been struck by the almost paternal protection and affection which he expressed for his area. The economic argument mounted by the right hon. Gentleman obviously impressed the House. There is the widest concern following the part closure of the Irlam works and the issue is being considered by the Corporation.The withdrawal of the


proposal to close the remainder of the works in 1973 is welcomed by all, as is the decision to discuss alternatives with the trade unions, including sale to the private sector.
I understand that there has been a full exchange of information and I feel sure that the Corporation is aware of the concern and anxiety and will make its decisions as soon as it can. We in the Department will make sure that everything will be done to bring these decisions forward as quickly as possible.
The hon. Member for Stoke-on-Trent, North (Mr. Forrester) referred to the Shelton works. This has been of concern to many people and the reasoned case for new investment is fully understood by the Corporation.
The decision about individual works must, however, rest with the Corporation, as the Opposition Front Bench wants. It is of the greatest importance that people should realise that when the overall investment decisions are made and the long term interests of the industry are decided, the Government will and must take into account the regional, social and employment problems involved.

Mr. Varley: What about the balance of payments problem, which figures in our Motion? The Government may say that they cannot publish the Joint Steering Group's report because of commercial confidences, but, assuming the Chancellor of the Exchequer's 5 per cent. growth rate over the next few years, surely they can say what the amount of steel imports will be by 1980.

Mr. Emery: The Corporation—and it is frank and open about this matter—believes that the opportunities available to the British steel industry are such that it is confident that the amount of exports which it will make will be greater than the amount of imports. This is of major importance, and I should like to back it up by giving the investment situation.
For the medium term, we have indicated, without commitment, in the White

Paper on public expenditure that the scale of expenditure envisaged up to 1975 and 1976 is £255 million at March, 1971, prices. In the long term, we envisage expenditure continuing during the 1970s at a high level, within the range of £200 million to £280 million, again at March, 1971 prices. Therefore, regardless of where capacity lies or whether there is a new major development, we are continuing with the sort of high level of expenditure which was never experienced when the Labour Party was in power.

I should put on the record the exact investment position at standard 1971 prices. It was £86 million in 1967–68, £83 million in 1968–69 and, because of alteration in the accounting period, in the six months from 1969 to 1970 it was £41 million. In the next 12 months it was £152 million. Therefore, the total over the whole period was only £362 million at the standard rate. Since the Conservative Party has been in power, the figures have been £242 million, £265 million and a provisional figure now of over £200 million. Compared with the figure of £362 million over four years while the Labour Party was in office, the figure today is £707 million.

This is the sort of thing that has been entirely neglected by the Opposition during the debate. The Opposition have been trying to ignore the situation because they are ashamed of what they were able to achieve for the steel industry while they were in office. Right hon. and hon. Members opposite are the sort of people who, when their arguments are weak, talk louder with their tongue in their cheek, as they have done today.

Mr. Walter Harrison: Mr. Walter Harrison (Wakefield) rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put,put and agreed to.

Question put accordingly, That the Amendment be made:—

The House divided: Ayes 299. Noes 264.

Division No. 190.]
AYES
[10.0 p.m.


Adley, Robert
Astor, John
Barber, Rt. Hn. Anthony


Alison, Michael (Barkston Ash)
Atkins, Humphrey
Batsford, Brian


Allason, James (Hemel Hempstead)
Awdry, Daniel
Beamish, Col. Sir Tufton


Amery, Rt. Hn. Julian
Baker, Kenneth (St. Marylebone)
Bell, Ronald


Archer, Jeffrey (Louth)
Balniel, Lord
Bennett, Dr. Reginald (Gosport)




Benvon, W.
Griffiths, Eldon (Bury St. Edmunds)
Miscampbell, Norman


Berry, Hn. Anthony
Grylls, Michael
Mitchell, Lt.-Col. C. (Aberdeenshire, W)


Biffen, John
Gummer, J. Selwyn
Mitchell, David (Basingstoke)


Blaker, Peter
Gurden, Harold
Moate, Roger


Boardman, Tom (Leicester, S.W.)
Hall, John (Wycombe)
Molyneaux, James


Body, Richard
Hall-Davis, A. G. F.
Money, Ernle


Boscawen, Robert
Hamilton, Michael (Salisbury)
Monks, Mrs. Connie


Bossom, Sir Clive
Hannam, John (Exeter)
Monro, Hector


Bowden, Andrew
Harrison, Brian (Maldon)
Montgomery, Fergus


Braine, Bernard
Harrison, Col. Sir Harwood (Eye)
More, Jasper


Bray, Ronald
Haselhurst, Alan
Morgan, Geraint (Denbigh)


Brewis, John
Hastings, Stephen
Morgan-Giles, Rear-Adm.


Brinton, Sir Tatton
Havers, Michael
Morrison, Charles


Brocklebank-Fowler, Christopher
Hawkins, Paul
Mudd, David


Brown, Sir Edward (Bath)
Hayhoe, Barney
Murton, Oscar


Bruce-Gardyne, J.
Heath, Rt. Hn. Edward
Nabarro, Sir Gerald


Bryan, Paul
Heseltine, Michael
Neave, Airey


Buchanan-Smith, Alick (Angus, N&amp;M)
Hicks, Robert
Nicholls, Sir Harmar


Buck, Antony
Higgins, Terence L.
Noble, Rt. Hn. Michael


Bullus, Sir Eric
Hiley, Joseph
Normanton, Tom


Burden, F. A.
Hill, John E. B. (Norfolk, S.)
Nott, John


Butler, Adam (Bosworth)
Hill, James (Southampton, Test)
Onslow, Cranley


Campbell, Rt. Hn. G. (Moray &amp; Nairn)
Holland, Philip
Oppenheim, Mrs. Sally


Carlisle, Mark
Holt, Miss Mary
Osborn, John


Carr, Rt. Hn. Robert
Hordern, Peter
Owen, Idris (Stockport, N.)


Cary, Sir Robert
Hornby, Richard
Page, Graham (Crosby)


Channon, Paul
Howe, Hn. Sir Geoffrey (Reigate)
Page, John (Harrow, W.)


Chapman, Sydney
Howell, Ralph (Norfolk, N.)
Parkinson, Cecil


Chataway, Rt. Hn. Christopher
Hunt, John
Percival, Ian


Churchill, W. S.
Hutchison, Michael Clark
Peyton, Rt. Hn. John


Clark, William (Surrey, E.)
Iremonger, T. L.
Pike, Miss Mervyn


Clarke, Kenneth (Rushcliffe)
Irvine, Bryant Godman (Rye)
Pink, R. Bonner


Cockeram, Eric
James, David
Powell, Rt. Hn. J. Enoch


Cooke, Robert
Jenkins, Patrick (Woodford)
Price, David (Eastleigh)


Coombs, Derek
Jennings, J. C. (Burton)
Proudfoot, Wilfred


Cooper, A. E.
Jessel, Toby
Pym, Rt. Hn. Francis


Cordle, John
Johnson Smith, G. (E. Grinstead)
Quennell, Miss J. M.


Corfield, Rt. Hn. Frederick
Jones, Arthur (Northants, S.)
Raison, Timothy


Cormack, Patrick
Jopling, Michael
Ramsden, Rt. Hn. James


Costain, A. P.
Joseph, Rt. Hn. Sir Keith
Rawlinson, Rt. Hn. Sir Peter


Critchley, Julian
Kaberry, Sir Donald
Redmond, Robert


Crouch, David
Kellett-Bowman, Mrs. Elaine
Reed, Laurance (Bolton, E.)


Crowder, F. P.
Kershaw, Anthony
Rees, Peter (Dover)


Davies, Rt. Hn. John (Knutsford)
Kilfedder, James
Rees-Davies, W. R.


d'Avigdor-Goldsmid, Maj.-Gen. James
Kimbell, Marcus
Renton, Rt. Hn. Sir David


Dean, Paul
King, Evelyn (Dorset, S.)
Rhys Williams, Sir Brandon


Deedes, Rt. Hn. W. F.
King, Tom (Bridgwater)
Ridley, Hn. Nicholas


Digby, Simon Wingfield
Kinsey, J. R.
Ridsdale, Julian


Dixon, Piers
Kirk, Peter
Rippon, Rt. Hn. Geoffrey


Dodds-Parker, Douglas
Kitson, Timothy
Roberts, Michael (Cardiff, N.)


Drayson, G. B.
Knight, Mrs. Jill
Roberts, Wyn (Conway)


du Cann, Rt. Hn. Edward
Knox, David
Rodgers, Sir John (Sevenoaks)


Eden, Sir John
Lambton Lord
Rossi, Hugh (Hornsey)


Edwards, Nicholas (Pembroke)
Lamont, Norman
Rost, Peter


Elliot, Capt. Walter (Carshalton)
Lane, David
Royle, Anthony


Elliot, R. W. (N'c'tle-upon-Tyne, N.)





Langford-Holt, Sir John
Russell, Sir Ronald


Emery, Peter
Legge-Bourke, Sir Harry
St. John-Stevas, Norman


Eyre, Reginald
Le Marchant, Spencer
Sandys, Rt. Hn. D.


Farr, John
Lewis, Kenneth (Rutland)
Scott, Nicholas


Fell, Anthony
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Sharples, Richard


Fenner, Mrs. Peggy
Lloyd, Ian (P'tsm'th, Langstone)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Fidler, Michael
Longden, Gilbert
Shelton, William (Clapham)


Finsberg, Geoffrey (Hampstead)
Loveridge, John
Simeons, Charles


Fisher, Nigel (Surbiton)
Luce, R. N.
Sinclair, Sir George


Fletcher-Cooke, Charles
McAdden, Sir Stephen
Skeet, T. H. H.


Fookes, Miss Janet
MacArthur, Ian
Smith Dudley (W'wick &amp; L'mington)


Fortescue, Tim
McCrindle, R. A.
Soref, Harold


Foster, Sir John
McLaren, Martin
Speed, Keith


Fowler, Norman
Maclean, Sir Fitzroy
Spence, John


Fox, Marcus
Macmillan, Maurice (Farnham)
Sproat, Iain


Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)




Fry, Peter
McNair-Wilson, Michael
Stainton, Keith


Gardner, Edward
McNair-Wilson, Patrick(NewForest)
Stanbrook, Ivor


Gibson-Watt, David
Maddan, Martin
Stewart-Smith, Geoffrey (Belper)


Gilmour, Ian (Norfolk, C.)
Madel, David
Stodart, Anthony (Edinburgh, W.)


Gilmour, Sir John (Fife, E.)
Marples, Rt. Hn. Ernest
Stoddart- Scott, Col. Sir M.


Glyn, Dr. Alan
Marten, Neil
Stokes, John


Goodhart, Philip
Mather, Carol
Stuttaford, Dr. Tom


Goodhew, Victor
Maude, Angus
Sutcliffe, John


Gorst John
Maudling, Rt. Hn. Reginald
Tapsell, Peter


Gower, Raymond
Mawby, Ray
Taylor, Sir Charles (Eastbourne)


Grant, Anthony (Harrow. C.)
Maxwell-Hyslop, R. J.
Taylor, Edward M. (G'gow, Cathcart)


Gray, Hamish
Meyer, Sir Anthony
Taylor, Frank (Moss Side)


Green, Alan
Mills, Peter (Torrington)
Tebbit, Norman


Grieve, Percy
Mills, Stratton (Belfast, N.)
Temple, John M.







Thatcher, Rt. Hn. Mrs. Margaret
Waddington, David
Wolrige-Gordon, Patrick


Thomas, John Stradling (Monmouth)
Walker, Rt. Hn. Peter (Worcester)
Wood, Rt. Hn. Richard


Thomas, Rt. Hn. Peter (Hendon, S.)
Walker-Smith, Rt. Hn. Sir Derek
Woodhouse, Hn. Christopher


Thompson, Sir Richard (Croydon, S.)
Wall, Patrick
Woodnutt, Mark


Tilney, John
Walters, Dennis
Worsley, Marcus


Trafford, Dr. Anthony
Ward, Dame Irene
Wylie, Rt. Hn. N. R.


Trew, Peter
Warren, Kenneth
Younger, Hn. George


Tugendhat, Christopher
Wells, John (Maidstone)



Turton, Sir Robin
White, Roger (Gravesend)
TELLERS FOR THE AYES:


van Straubenzee, W. R.
Wiggin, Jerry
Mr. Bernard Weatherill and


Vaughan, Dr. Gerard
Wilkinson, John
Mr. Walter Clegg.


Vickers, Dame Joan
Winterton, Nicholas





NOES


Abse, Leo
Edwards, Robert (Bliston)
Lawson, George


Albu, Austen
Edwards, William (Merioneth)
Leadbitter, Ted


Allaun, Frank (Salford, E.)
Ellis, Tom
Lee, Rt. Hn. Frederick


Allen, Scholefield
English, Michael
Leonard, Dick


Archer, Peter (Rowley Regis)
Evans, Fred
Lestor, Miss Joan


Armstrong, Ernest
Faulds, Andrew
Lever, Rt. Hn. Harold


Ashley, Jack
Fernyhough, Rt. Hn. E.
Lipton, Marcus


Ashton, Joe
Fisher, Mrs. Doris (B'ham, Ladywood)
Lomas, Kenneth


Atkinson, Norman
Fitch, Alan (Wigan)
Loughlin, Charles


Bagier, Gordon A. T.
Fletcher, Raymond (Ilkeston)
Lyon, Alexander W. (York)


Barnes, Michael
Fletcher, Ted (Darlington)
Lyons, Edward (Bradford, E.)


Barnett, Guy (Greenwich)
Foley, Maurice
McBride, Neil


Barnett, Joel (Heywood and Royton)
Foot, Michael
McCartney, Hugh


Baxter, William
Ford, Ben
McElhone, Frank


Benn, Rt. Hn. Anthony Wedgwood
Forrester, John
McGuire, Michael


Bennett, James (Glasgow, Bridgeton)
Fraser, John (Norwood)
Mackenzie, Gregor


Bidwell, Sydney
Freeson, Reginald
Mackie, John


Bishop, E. S.
Galpern, Sir Myer
Mackintosh, John P.


Blenkinsop, Arthur
Garrett, W. E.
Maclennan, Robert


Boardman, H. (Leigh)
Gilbert, Dr. John
McMillan, Tom (Glasgow, C.)


Booth, Albert
Ginsburg, David (Dewsbury)
McNamara, J. Kevin


Bottomley, Rt. Hn. Arthur
Gordon Walker, Rt. Hn. P. C.
Mahon, Simon (Bootle)


Bradley, Tom
Grant, George (Morpeth)
Mallalieu, J. P. W. (Huddersfield, E.)


Brown, Bob (N'c'tle-upon-Tyne, W.)
Grant. John D. (Islington, E.)
Marks, Kenneth


Brown, Hugh D. (G'gow, Provan)
Griffiths, Eddie (Brightside)
Marquand, David


Brown, Ronald (Shoreditch &amp; F'bury)
Griffiths, Will (Exchange)
Marsden, F.


Buchan, Norman
Grimond, Rt. Hn. J.
Marshall, Dr. Edmund


Buchanan, Richard (G'gow, Sp'burn)
Hamilton, William (Fife, W.)
Mason, Rt. Hn. Roy


Butler, Mrs. Joyce (Wood Green)
Hamling, William
Mayhew, Christopher


Callaghan, Rt. Hn. James
Hannan, William (G'gow, Maryhill)
Meacher, Michael


Campbell, I. (Dunbartonshire, W.)
Hardy, Peter
Mellish, Rt. Hn. Robert


Cant, R. B.
Harper, Joseph
Mendelson, John


Carmichael, Neil
Harrison, Walter (Wakefield)
Mikardo, Ian


Carter, Ray (Birmingh'm, Northfield)
Hart, Rt. Hn. Judith
Millan, Bruce


Carter-Jones, Lewis (Eccles)
Hattersley, Roy
Miller, Dr. M. S.


Castle, Rt. Hn. Barbara
Healey, Rt. Hn. Denis
Milne, Edward


Clark, David (Colne Valley)
Heffer, Eric S.
Mitchell, R. C. (S'hampton, Itchen)


Cocks, Michael (Bristol, S.)
Hilton, W. S.
Molloy, William


Cohen, Stanley
Hooson, Emlyn
Morgan, Elystan (Cardiganshire)


Coleman, Donald
Horam, John
Morris, Alfred (Wythenshawe)


Concannon, J. D.
Houghton, Rt. Hn. Douglas
Morris, Rt. Hn. John (Aberavon)


Conlan, Bernard
Howell, Denis (Small Heath)
Moyle, Roland


Corbet, Mrs. Freda
Huckfield, Leslie
Mulley, Rt. Hn. Frederick


Cox, Thomas (Wandsworth, C.)
Hughes, Rt. Hn. Cledwyn (Anglesey)
Murray, Ronald King


Crawshaw, Richard
Hughes, Mark (Durham)
Oakes, Gordon


Cronin, John
Hughes, Robert (Aberdeen, N.)
O'Halloran, Michael


Crosland, Rt. Hn. Anthony
Hughes, Roy (Newport)
Oram, Bert


Cunningham, G. (Islington, S.W.)
Hunter, Adam
Orbach, Maurice


Dalyell, Tam
Irvine, Rt. Hn. Sir Arthur (Edge Hill)
Orme, Stanley


Darling, Rt. Hn. George
Janner, Greville
Oswald, Thomas


Davidson, Arthur
Jay, Rt. Hn. Douglas
Padley, Walter


Davies, Denzil (Llanelly)
Jeger, Mrs. Lena
Paget, R. T.


Davies, Ifor (Gower)
Jenkins, Hugh (Putney)
Palmer, Arthur


Davis, Clinton, (Hackney, C)
Jenkins, Rt. Hn. Roy (Stechford)
Pannell, Rt. Hn. Charles


Davis, Terry (Bromsgrove)
John, Brynmor
Parry, Robert (Liverpool, Exchange)


Deakins, Eric
Johnson, Carol (Lewisham, S.)
Pavitt, Laurie


de Freitas, Rt. Hn. Sir Geoffrey
Johnson, James (K'ston-on-Hull, W.)
Peart, Rt. Hn. Fred


Dell, Rt. Hn. Edmund
Johnston, Russell (Inverness)
Pendry, Tom


Dempsey, James
Jones, Barry (Flint, E.)
Pentland, Norman


Doig, Peter
Jones, Dan (Burnley)
Perry, Ernest G.


Dormand, J. D.
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Prentice, Rt. Hn. Reg.


Douglas, Dick (Stirlingshire, E.)
Jones, Gwynoro (Carmarthen)
Prescott, John


Douglas-Mann, Bruce
Jones, T. Alec (Rhondda, W.)
Price, J. T. (Westhoughton)


Driberg, Tom
Kaufman, Gerald
Price, William (Rugby)


Duffy, A. E. P.
Kinnock, Neil
Probert, Arthur


Dunn, James A.
Lambie, David
Rankin, John


Dunnett, Jack
Lamborn, Harry
Reed, D. (Sedgefield)


Eadie, Alex
Lamond, James
Rees, Merlyn (Leeds, E.)


Edelman, Maurice
Latham, Arthur
Rhodes, Geoffrey







Roberts, Albert (Normanton)
Spriggs, Leslie
Wallace, George


Roberts, Rt. Hn. Goronwy (Caernarvon)
Stallard, A. W.
Watkins, David


Robertson, John (Paisley)
Steel, David
Weitzman, David


Roderick, Caerwyn E. (Br'c'n &amp; R'tlnor)
Stewart. Rt. Hn. Michael (Fulham)
Wellbeloved, James


Rodgers, William (Stockton-on-Tees)
Stoddart, David (Swindon)
Wells, William (Walsall, N.)


Roper, John
Stonehouse, Rt. Hn. John
White, James (Glasgow, Pollok)


Rose, Paul B.
Strang, Gavin
Whitehead, Phillip


Ross, Rt. Hn. William (Kilmarnock)
Strauss, Rt. Hn. G. R.
Whitlock, William


Rowlands, Ted
Summerskill, Hn. Dr. Shirley
Willey, Rt. Hn. Frederick


Sandelson, Neville
Swain, Thomas
Williams, Alan (Swansea, W.)


Sheldon, Robert (Ashton-under-Lyne)
Taverne, Dick
Williams. Mrs. Shirley (Hitchin)


Shore, Rt. Hn. Peter (Stepney)
Thomas, Rt. Hn. George (Cardiff, W.)
Williams, W. T. (Warrington)


Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Thomson, Rt. Hn. G. (Dundee. E.)
Wilson, Alexander (Hamilton)


Silkin, Rt. Hn. John (Deptford)
Tinn, James
Wilson, William (Coventry. S.)


Silkin, Hn. S. C. (Dulwich)
Tomney, Frank
Woof, Robert


Sillars, James
Torney, Tom



Silverman, Julius
Tuck, Raphael
TELLERS FOR THE NOES:


Skinner, Dennis
Urwin, T. W.
Mr. James Hamilton and


Small, William
Varley, Eric G.
Mr John Goldins.


Smith, John (Lanarkshire, N.)
Wainwright, Edwin



Spearing, Nigel
Walker, Harold (Doncaster)

Question accordingly agreed to

Main Question, as amended, put:—

The House Divided: Ayes 296, Noes 263.

Division No. 191.1
AYES
[10.12 p.m.]


Adley, Robert
Crouch, David
Hastings, Stephen


Alison, Michael (Barkston Ash)
Crowder, F. P.
Havers, Michael


Allason, James (Hemel Hempstead)
Davies, Rt. Hn. John (Knutsford)
Hawkins, Paul


Amery, Rl. Hn. Julian
d'Avigdor-Goldsmid, Maj.-Gen. James
Hayhoe, Barney


Archer, Jeffrey (Louth)
Dean, Paul
Heath, Rt. Hn. Edward


Astor, John
Deedes, Rt. Hn. W. F.
Heseltine, Michael


Atkins, Humphrey
Digby, Simon Wingfleld
Hicks, Robert


Awdry, Daniel
Dixon, Piers
Higgins, Terence L.


Baker, Kenneth (St. Marylebone)
Dodds-Farker, Douglas
Hiley, Joseph


Balniel, Lord
Drayson, G. B.
Hill, John E. B. (Norfolk, S.)


Barber, Rt. Hn. Anthony
du Cann, Rt. Hn. Edward
Hill, James (Southampton. Test)


Batsford, Brian
Eden, Sir John
Holland, Philip


Beamish, Col. Sir Tufton
Edwards, Nicholas (Pembroke)
Holt, Miss Mary


Bell, Ronald
Elliot, Capt. Walter (Carshalton)
Hornby, Richard


Bennett, Dr. Reginald (Gosport)
Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Howe, Hn. Sir Geoffrey (Reigate)


Benyon, W.
Emery, Peter
Howell, Ralph (Norfolk, N.)


Berry, Hn. Anthony
Eyre, Reginald
Hunt, John


Biffen, John
Farr, John
Hutchison, Michael Clark


Blaker, Peter
Fell, Anthony
Iremonger, T. L.


Boardman, Tom (Leicester, S.W.)
Fenner, Mrs. Peggy
Irvine, Bryant Godman (Rye)


Body, Richard
Fidler, Michael
James, David


Boscawen, Robert
Finsberg, Geoffrey (Hampstead)
Jenkin, Patrick (Woodford)


Bossom, Sir Clive
Fisher, Nigel (Surbiton)
Jennings, J. C. (Burton)


Bowden, Andrew
Fletcher-Cooke, Charles
Jessel, Toby


Braine, Bernard
Fookes, Miss Janet
Johnson Smith G. (E. Grinstead)


Bray, Ronald
Fortescue, Tim
Jopling, Michael


Brewis, John
Foster, Sir John
Joseph, Rt. Hn. Sir Keith


Brinton, Sir Tatton
Fowler, Norman
Kaberry, Sir Donald


Brocklebank-Fowler, Christopher
Fox, Marcus
Kellett-Bowman, Mrs Elaine


Brown, Sir Edward (Bath)
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Kershaw Anthony


Bruce-Gardyne, J.
Fry, Peter
Kilfedder, James


Bryan, Paul
Gardner, Edward
Kimball Marcus


Buchanan-Smith, Alick (Angus, N&amp;M)
Gibson-Watt, David
King, Evelyn (Dorset, S.)


Buck, Antony
Gilmour, Ian (Norfolk, C.)
King, Tom (Bridgwater)


Bullus, Sir Eric
Gilmour, Sir John (Fife. E.)
Kinsey, J. R.


Burden, F. A.
Glyn, Dr. Alan
Kirk, Peter


Butler, Adam (Bosworth)
Goodhart, Philip
Kitson, Timothy


Campbell, Rt. Hn. G. (Moray&amp;Nairn)
Goodhew, Victor
Knight, Mrs. Jill


Carlisle, Mark
Gorst, John
Knox, David


Carr, Rt. Hn. Robert
Gower, Raymond
Lambton, Lord


Cary, Sir Robert
Grant, Anthony (Harrow, C.)
Lamont, Norman


Channon, Paul
Gray, Hamish
Lane, David


Chapman, Sydney
Green, Alan
Langford-Holt, Sir John


Chataway, Rt. Hn. Christopher
Grieve, Percy
Legge-Bourke, Sir Harry


Churchill, W. S.
Griffiths, Eldon (Bury St. Edmunds)
Le Marchant, Spencer


Clark, William (Surrey, E.)
Grylls, Michael
Lewis, Kenneth (Rutland)


Clarke, Kenneth (Rushcliffe)
Gummer, J. Selwyn
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)


Cockeram, Eric
Gurden, Harold
Lloyd, Ian (P'tsm'th, Langstone)


Cooke, Robert
Hall, John (Wycombe)
Longden, Gilbert


Coombs, Derek
Hall-Davis, A. G. F.
Loveridge, John


Cooper, A. E.
Hamilton, Michael (Salisbury)
Luce, R. N.


Cordle, John
Hannam, John (Exeter)
McAdden, Sir Stephen


Corfield, Rt. Hn. Frederick
Harrison, Brian (Maldon)
MacArthur, Ian


Cormack, Patrick
Harrison, Col. Sir Harwood (Eye)
McCrindle, R. A.


Costain, A. P.
Haselhurst, Alan
McLaren, Martin




Maclean, Sir Fitzroy
Pike, Miss Mervyn
Stokes, John


Macmillan, Maurice (Farnham)
Pink, R. Bonner
Stuttaford, Dr. Tom


McNair-Wilson, Michael
Powell, Rt. Hn. J. Enoch
Sutcliffe, John


McNair-Wilson, Patrick (New Forest)
Price, David (Eastleigh)
Tapsell, Peter


Maddan, Martin
Proudfoot, Wilfred
Taylor, Sir Charles (Eastbourne)


Madel, David
Pym, Rt. Hn. Francis
Taylor, Edward M. (G'gow,Cathcart)


Marples, Rt. Hn. Ernest
Quennell, Miss J. M.
Taylor, Frank (Moss Side)


Marten, Neil
Raison, Timothy
Tebbit, Norman


Mather, Carol
Ramsden, Rt. Hn. James
Temple, John M.


Maude, Angus
Rawlinson, Rt. Hn. Sir Peter
Thatcher, Rt. Hn. Mrs. Margaret


Maudling, Rt. Hn. Reginald
Redmond, Robert
Thomas, John Stradling (Monmouth)


Mawby, Ray
Reed, Laurance (Bolton, E.)
Thomas, Rt. Hn. Peter (Hendon, S.)


Maxwell-Hyslop, R. J.
Rees, Peter (Dover)
Thompson, Sir Richard (Croydon, S.)


Meyer, Sir Anthony
Rees-Davies, W. R.
Tilney, John


Mills, Peter (Torrington)
Renton, Rt. Hn. Sir David
Trafford, Dr. Anthony


Mills, Stratton (Belfast, N.)
Rhys Williams, Sir Brandon
Trew, Peter


Miscampbell, Norman
Ridley, Hn. Nicholas
Tugendhat, Christopher


Mitchell, Lt.-Col. C. (Aberdeenshire, W.)
Ridsdale, Julian
Turton, Rt. Hn. Sir Robin


Mitchell, David (Basingstoke)
Rippon, Rt. Hn. Geoffrey
van Straubenzee, W. R.


Moate, Roger
Roberts, Michael (Cardiff, N.)
Vaughan, Dr. Gerard


Money, Ernle
Roberts, Wyn (Conway)
Vickers, Dame Joan


Monks, Mrs. Connie
Rodgers, Sir John (Sevenoaks)
Waddington, David


Monro, Hector
Rossi, Hugh (Hornsey)
Walker, Rt. Hn. Peter (Worcester)


Montgomery, Fergus
Rost, Peter
Walker-Smith, Rt. Hn. Sir Derek


More, Jasper
Royle, Anthony
Wall, Patrick


Morgan, Geraint (Denbigh)
Russell, Sir Ronald
Walters, Dennis


Morgan-Giles, Rear-Adm.
St. John-Stevas, Norman
Ward, Dame Irene


Morrison, Charles
Sandys, Rt. Hn. D.
Warren, Kenneth


Mudd, David
Scott, Nicholas
Wells, John (Maidstone)


Murton, Oscar
Sharpies, Richard
White, Roger (Gravesend)


Nabarro, Sir Gerald
Shaw, Michael (Sc'b'gh &amp; Whitby)
Wiggin, Jerry


Neave, Airey
Shelton, William (Clapham)
Wilkinson, John


Nicholls, Sir Harmar
Simeons, Charles
Winterton, Nicholas


Noble, Rt. Hn. Michael
Sinclair, Sir George
Wolrige-Gordon, Patrick


Normanton, Tom
Skeet, T. H. H.
Wood, Rt. Hn. Richard


Nott, John
Smith, Dudley (W'wick &amp; L'mington)
Woodhouse, Hn. Christopher


Onslow, Cranley
Soref, Harold
Woodnutt, Mark


Oppenheim, Mrs. Sally
Speed, Keith
Worsley, Marcus


Osborn, John
Spence, John
Wylie, Rt. Hn. N. R.


Owen, Idris (Stockport, N.)
Sproat, Iain
Younger, Hn. George


Page, Graham (Crosby)
Stainton, Keith



Page, John (Harrow, W.)
Stanbrook, Ivor
TELLERS FOR THE AYES:


Parkinson, Cecil
Stewart-Smith, Geoffrey (Belper)
Mr. Bernard Weatherill and


Percival, Ian
Stodart, Anthony (Edinburgh, W.)
Mr. Walter Clegg.


Peyton, Rt. Hn. John
Stoddart-Scott, Col. Sir M.





NOES


Abse, Leo
Clark, David (Colne Valley)
Ellis, Tom


Albu, Austen
Cocks, Michael (Bristol, S.)
English, Michael


Allaun, Frank (Salford, E.)
Cohen, Stanley
Evans, Fred


Allen, Scholefield
Coleman, Donald
Faulds, Andrew


Archer, Peter (Rowley Regis)
Concannon, J. D.
Fernyhough, Rt. Hn. E.


Armstrong, Ernest
Conlan, Bernard
Fisher,Mrs. Doris(B'ham,Ladywood)


Ashley, Jack
Corbet, Mrs. Freda
Fitch, Alan (Wigan)


Ashton, Joe
Cox, Thomas (Wandsworth, C.)
Fletcher, Raymond (llkeston)


Atkinson, Norman
Crawshaw, Richard
Fletcher, Ted (Darlington)


Bagier, Gordon A. T.
Cronln, John
Foley, Maurice


Barnes, Michael
Crosland, Rt. Hn. Anthony
Foot, Michael


Barnett, Guy (Greenwich)
Cunningham, G. (Islington, S.W.)
Ford, Ben


Barnett, Joel (Heywood and Royton)
Dalyell, Tarn
Forrester, John


Baxter, William
Darling, Rt. Hn. George
Fraser, John (Norwood)


Benn, Rt. Hn. Anthony Wedgwood
Davidson, Arthur
Freeson, Reginald


Bennett, James (Glasgow, Bridgeton)
Davies, Denzil (Llanelly)
Galpern, Sir Myer


Bidwell, Sydney
Davies, Ifor (Gower)
Garrett, W. E.


Bishop, E. S.
Davis, Clinton (Hackney, C.)
Gilbert, Dr. John


Blenkinsop, Arthur
Davis, Terry (Bromsgrove)
Ginsburg, David (Dewsbury)


Boardman, H. (Leigh)
Deakins, Eric
Gordon Walker, Rt. Hn. P. C.


Booth, Albert
de Freitas, Rt. Hn. Sir Geoffrey
Grant, George (Morpeth)


Bradley, Tom
Dell, Rt. Hn. Edmund
Grant, John D. (Islington, E.)


Brown, Bob (N'c'tle-upon-Tyne,W.)
Dempsey, James
Griffiths, Eddie (Brightside)


Brown, Hugh D. (G'gow, Provan)
Doig, Peter
Griffiths, Will (Exchange)


Brown, Ronald (Shoreditch &amp; F'bury)
Dormand, J. D.
Grimond, Rt. Hn. J.


Buchan, Norman
Douglas, Dick (Stirlingshire, E.)
Hamilton, William (Fife, W.)


Buchanan, Richard (G'gow, Sp'burn)
Douglas-Mann, Bruce
Hamling, William


Butler, Mrs. Joyce (Wood Green)
Driberg, Tom
Hannan, William (G'gow, Maryhill)


Callaghan, Rt. Hn. James
Duffy, A. E. P.
Hardy, Peter


Campbell, I (Dunbartonshire, W.)
Dunn, James A.
Harper, Joseph


Cant, R. B.
Dunnett, Jack
Harrison, Walter (Wakefield)


Carmichael, Nell
Eadie, Alex
Hart, Rt. Hn. Judith


Carter, Ray (Birmingham, Northfield)
Edelman, Maurice
Hattersley, Roy


Carter-Jones, Lewis (Eccles)
Edwards, Robert (Bilston)
Healey, Rt. Hn. Denis


Castle, Rt. Hn. Barbara
Edwards, William (Merioneth)
Heffer, Eric S.







Hilton, W. S.
Marks, Kenneth
Rowlands, Ted


Hooson, Emlyn
Marquand, David
Sandelson, Neville


Horam, John
Marsden, F.
Sheldon, Robert (Ashton-under-Lyne)


Houghton, Rt. Hn. Douglas
Marshall, Dr. Edmund
Shore, Rt. Hn. Peter (Stepney)


Howell, Denis (Small Heath)
Mason, Rt. Hn. Roy
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)


Huckfield, Leslie
Mayhew, Christopher
Silkin, Rt. Hn. John (Deptford)


Hughes, Rt. Hn. Cledwyn (Anglesey)
Meacher, Michael
Silkin, Hn. S. C. (Dulwich)


Hughes, Mark (Durham)
Mellish, Rt. Hn. Robert
Sillars, James


Hughes, Robert (Aberdeen, N.)
Mendelson, John
Silverman, Julius


Hughes, Roy (Newport)
Mikardo, Ian
Skinner, Dennis


Hunter, Adam
Millan, Bruce
Small, William


Irvine, Rt. Hn. Sir Arthur (Edge Hill)
Miller, Dr. M. S.
Smith, John (Lanarkshire, N.)


Janner, Greville
Milne, Edward
Spearing, Nigel


Jay, Rt. Hn. Douglas
Mitchell, R. C. (S'hampton, Itchen)
Spriggs, Leslie


Jeger, Mrs. Lena
Molloy, William
Stallard, A. W.


Jenkins, Hugh (Putney)
Morgan, Elystan (Cardiganshire)
Steel, David


Jenkins, Rt. Hn. Roy (Stechford)
Morris, Alfred (Wythenshawe)
Stewart, Rt. Hn. Michael (Fulham)


John, Brynmor
Morris, Rt. Hn. John (Aberavon)
Stoddart, David (Swindon)


Johnson, Carol (Lewisham, S.)
Moyle, Roland
Stonehouse, Rt. Hn. John


Johnson, James (K'ston-on-Hull, W.)
Mulley, Rt. Hn. Frederick
Strang, Gavin


Johnston, Russell (Inverness)
Murray, Ronald King
Strauss, Rt. Hn. G. R.


Jones, Barry (Flint, E.)
Oakes, Gordon
Summerskill, Hn. Dr. Shirley


Jones, Dan (Burnley)
O'Halloran, Michael
Swain, Thomas


Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Oram, Bert
Taverne, Dick


Jones, Gwynoro (Carmarthen)
Orbach, Maurice
Thomas, Rt. Hn. George (Cardiff, W.)


Jones, T. Alec (Rhondda, W.)
Orbach, Maurice
Thomson, Rt. Hn. G (Dundee, E.)


Kaufman, Gerald
Orme, Stanley
Thomson, Rt. Hn. G. (Dundee, E.)


Kinnock, Neil
Oswald, Thomas
Tinn, James


Lambie, David
Padley, Walter
Tomney, Frank


Lamborn, Harry
Paget, R. T.
Torney, Tom


Lamond, James
Palmer, Arthur
Tuck, Raphael


Latham, Arthur
Pannell, Rt. Hn. Charles
Urwin, T. W.


Lawson, George
Parry, Robert (Liverpool, Exchange)
Varley, Eric G.


Leadbitter, Ted
Pavitt, Laurie
Wainwright, Edwin


Lee. Rt. Hn. Frederick
Peart, Rt. Hn. Fred
Walker, Harold (Doncaster)


Leonard, Dick
Pendry, Tom
Wallace, George


Lestor, Miss Joan
Pentland, Norman
Watklns, David


Lever, Rt. Hn. Harold
Perry, Ernest G.
Weitzman, David


Lipton, Marcus
Prentice, Rt. Hn. Reg.
Wellbeloved, James


Lomas, Kenneth
Prescott, John
Wells, William (Walsall, N.)


Loughlin, Charles
Price, J. T. (Westhoughton)
White, James (Glasgow, Pollok)


Lyon, Alexander W. (York)
Price, William (Rugby)
Whitehead, Phillip


Lyons, Edward (Bradlord, E.)
Probert, Arthur
Whitlock, William


McBride, Neil
Rankin, John
Willey, Rt. Hn. Frederick


McCartney, Hugh
Reed, D. (Sedgefield)
Williams, Alan (Swansea, W.)


McElhone, Frank
Rees, Merlyn (Leeds, S.)
Williams, Mrs. Shirley (Hitchin)


McGuire, Michael
Rhodes, Geoffrey
Williams, W. T. (Warrington)


Mackenzie, Gregor
Roberts, Albert (Normanton)
Wilson, Alexander (Hamilton)


Mackie, John
Roberts, Rt. Hn. Goronwy (Caernarvon)
Wilson, William (Coventry, S.)


Mackintosh, John P.
Robertson, John (Paisley)
Woof, Robert


Maclennan, Robert
Roderick, Caerwyn E. (Br'c'n &amp; R'dnor)



McMillan, Tom (Glasgow, C.)
Rodgers, William (Stockton-on-Tees)
TELLERS FOR THE NOES:


McNamara, J. Kevin
Roper, John
Mr. James Hamilton and


Mahon, Simon (Bootle)
Rose, Paul B.
Mr. John Golding.


Mallalieu, J. P. W. (Huddersfield, E.)
Ross. Rt. Hn. William (Kilmarnock)

Question accordingly agreed to.

Resolved

That this House welcomes the Government's statement of 8th May on the steel industry with the announcement of the continuing high

momentum of investment as a major contribution to the flexible development of an efficient modern and profitable industry, thus able to provide greater security of employment and to make its full contribution to an expanding economy both regionally and nationally.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,
That the Overseas Investment and Export Guarantees Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[The Prime Minister]

Orders of the Day — OVERSEAS INVESTMENT AND EXPORT GUARANTEES BILL

As amended (in the Standing Committee), considered

Clause 1

INVESTMENT OVERSEAS: ARRANGEMENTS FOR MEETING NON-COMMERCIAL RISKS

10.26 p.m.

The Minister for Trade (Mr. Michael Noble): I beg to move Amendment No. 1, in page 2, line 6, at end insert:
(6) As soon as may be after 31st March in 1973 and in each subsequent year the Secretary of State shall prepare a report on the discharge of his functions under this section, and shall lay the report before Parliament.

Mr. Speaker: With this Amendment it will be appropriate to discuss Amendment No. 4, in page 2, line 6, at end insert:
(6) This section shall expire 12 months from the date of its coming into force unless a resolution of both Houses of Parliament decides that it should be continued for another year and the section may be renewed from year to year by the said resolution.

Mr. Noble: The purpose of the Amendment is to require an annual report on the operation of the Investment Insurance Scheme to be prepared and laid before Parliament. As hon. Members are aware, the Amendment is in fulfilment of an undertaking we gave when the Bill was being debated in Committee. It is an earnest of our intention to be as forthcoming to Parliament as is possible in providing information on the operation of the scheme.
The annual report will include the kind of information which hon. Members proposed in Committee: namely, an analysis of liabilities assumed by countries and by meaningful industrial categories, together with such project information as might usefully be given without breach of commercial confidence. It will also contain such other information and

analysis as would be helpful in providing a picture on the operation of the scheme.
I hope hon. Members will find that the Amendment meets their wishes to be provided with appropriate information on the scheme. I know some hon. Members would have liked us to go further in one or two respects. In particular it could be suggested that we should specify in the Bill the sorts of information we should provide in the report—for example, to specify that we should publish the amount of liabilities assumed by industry and publish a list of projects. There would, however, be difficulties about these requirements. The words "by industry" are not sufficiently precise to be satisfactory in a Statute, but it is, as I have mentioned, our intention to give information of this type drawn up in meaningful categories.
In the case of projects, hon. Members may be aware that most of the export credit insurance of the Export Credits Guarantee Department is confidential as between the exporter and the Department, whose involvement is not normally revealed to the buyer. Precisely the same considerations do not apply in the case of investment insurance. Indeed, the ECGD in its own interests will in some cases wish to reveal its involvement; but I believe there may be cases where the investor would wish his identity not to be revealed in a published statement by the ECGD, and I think that the ECGD should be free to respect such a wish. This will not often be the case and, as I have said before, there is or will be no desire on our part to be secretive.

Mrs. Judith Hart: I am delighted to see this Amendment on the Paper. As the Minister has said, it is in fulfilment of an undertaking we were given in Committee. It is fair to say that it was the only concession we were given. We welcome it none the less. As the right hon. Gentleman has explained, it is a little vaguer than we would have hoped. Nevertheless it will give us information every year about countries and industrial categories. I appreciate that the right hon. Gentleman cannot give us detailed information about specific individual companies. To that extent, therefore, it is probably difficult to give information


about specific projects. We shall have to see how the first report works out.
10.30 p.m.
I understand from what he said that the Minister intends to give us as much information as he can without breaching confidentiality. What we shall do with that information is another matter. He will present a report to Parliament. It would be open to Parliament to ask for a debate on it.
This is the only concession we have had on the general question of Government accountability to Parliament on the Bill. In Committee we put down several Amendments seeking to make the Bill more specific. We found it in many ways—and certainly in Clause 1—somewhat loosely drawn, giving a good deal too much power to the Executive and to Ministers and too little power to Parliament to question and to challenge what was done in the exercise of the large financial powers given under it. We should have liked what was done under Clause 1 to be subject to an annual review by Parliament under Statutory Instrument, but that we have failed to secure.
In a number of Bills nowadays—perhaps not major Bills, though the European Communities Bill is an example—there is a tendency to delegate to the Executive more and more of the functions which we have hitherto supposed would be exercised by the House. The present Bill is another instance.
I am delighted that the right hon. Gentleman has given us this Amendment, and we shall not press our Amendment No. 4 in the light of his concession. I must, however, register our view that there is still too little parliamentary accountability.

Mr. George Cunningham: I, too, welcome the Amendment, although there are several comments which should be made about it. In drafting terms we are left with a rather messy first Clause, which provides in different ways in two separate subsections, the existing subsection (5) and the new one, for the Minister to report to the House. However, that is a detail which perhaps is not worth bothering much about.
Do I understand that the information which the Minister has undertaken to provide will show the coverage by countries, so that we shall be able to see how much of the cover ise being directed, for instance, to South Africa, Greece and so on?

Mr. Noble: Mr. Noble indicated assent.

Mr. Cunningham: The right hon. Gentleman confirms that that is so, that the information will be by countries.
Although the Minister is to make a report to the House, there is no provision for the House to do anything with it. Our Amendment No. 4 is designed to ensure that the House will have a chance to express a view, to ensure that at least after the first 12 months of operation of the new scheme, under which the Executive is given untrammelled powers to do more or less what it wants, the House should have an opportunity to see how it has been operated and decide whether it ought to be continued, or at least express its view on the manner of its operation. It is a pity that the Government have decided to oppose all the suggestions for giving the House a built-in opportunity to discuss the operation of the Scheme.
In Committee we tried to persuade the Minister to build into the Bill a provision that the scheme ought not to be used in respect of a project in which racial discrimination was involved. The Minister declined to have that built into the Bill. We pressed him that if he could not do that, at least he should give an indication, when the Bill was further advanced in its progress through the House, of his attitude on this point, as he had in respect of other points, which would be something to quote against him if he ever strayed from the narrow path of rectitude over racial discrimination. We have persisted in seeking to ask the Government to make clear that they have no intention of operating the scheme in respect of any project in which an element of racial discrimination is to he found.

Mr. Laurie Pavitt: I wish to intervene very briefly. Naturally the whole House will welcome any Minister who is prepared to let us know what he is doing, because too often with so many Ministers we have no clue about what they are up to. We welcome very


much that we shall have the opportunity of looking at the report, but I suppose that of all the activities of Government Departments this is the one in which the time lag is perhaps the most important, because so much of the work we are able to do with the developing countries is long-term in its planning and in execution. It may well be that by the time the House has an opportunity of reading the report it will be too late to make all the very pertinent comments, criticisms and constructive suggestions we might wish to make. I therefore ask the Minister for an assurance that every endeavour will be made to ensure that the report will be received at a time which is pertinent to its contents.
In three years I served under two successive Governments on the Select Committee on Overseas Aid. In view of the Bill and the arrangements now being made, I wonder whether it might not be proper, for the report to be looked at very quickly by a group of hon. Members from both sides who might be able to make constructive suggestions about it rather than wait for the Leader of the House to find time in a very heavy parliamentary programme for a half-day debate on overseas aid.
Obviously, as a result of the Bill the report will be more pertinent. Suppose, however, that we had wanted to debate the whole question of insurance and the Government's attitude at Santiago, where we were the only people to abstain and 77 other nations supported the resolution. I presume that this kind of thing would be germane to a report to the House on the Government's actions. But in the case I have mentioned there would have been delay, and obviously the sooner we discuss the report the better.

Mr. Noble: I am grateful to the right hon. Member for Lanark (Mrs. Hart) for her welcome to the Amendment. We intended to meet as far as we could the points that the right hon. Lady and other hon. Members had made and from what has been said I think that the Amendment goes a fairly considerable way towards doing that.
I recognise the point which other Opposition Members have made tonight about parliamentary accountability. If we produce a report, and I will certainly try to produce it as quickly as possible,

this will give an opportunity to hon. Members to debate it. There are various ways in which, if they think things are going wrong, they can debate what we are doing. I am thinking of Questions, Supply Days and so on. Hon. Members can debate the matter in that way. We have no wish whatever for anything we are doing in these matters not to be open to parliamentary debate.
I have given a good deal of thought to the point about discrimination, particularly with regard to restaurants, hotels and so on. I should like to have what I am about to say on the record, so that if there were any question of my doing anything disreputable at least I should be hooked. I do not think it is desirable or technically necessary to insert such a provision in the Bill. However, I am willing to give the general undertaking, which will be observed by the ECGD in its administration of the scheme, that it is not our intention through either the investment insurance or the pre-investment study scheme to encourage investment in restaurants, hotels or other public facilities which would be likely to be run in a racially discriminatory manner.
I hope this may help hon. Members to realise that what I said in Committee was sincere and that the ECGD in its administration will follow that.

Amendment agreed to.

Mrs. Hart: I beg to move Amendment No. 2, in page 2, line 6, at end insert:
(6) The Secretary of State shall publish a code of conduct in respect of persons and companies investing in developing countries, and it shall be a condition of cover being provided under this section that the investor adheres to the code of conduct.
As in Committee, we are delighted that we have with us the Minister for Overseas Development, who must have returned very recently from far places—I saw that he was in very distant places over the weekend.
The substance of the Amendment is that to which we attached a great deal of importance in Committee. Under the Bill the Government are providing a system of insurance for private investment, primarily but not entirely in developing countries. They are doing so because they believe that private investment is the most important element in overseas aid. We should be clear that that is the Government's belief.
There has been a great difference of view between the two sides in the House on what constitutes aid and what does not. There has been a great difference of view about whether the Government should accept the international target which is related entirely to Government expenditure. We on our side have not succeeded in persuading the Government that they should do so. The Government have been adamant—they were most adamant in Committee—that the target that included private investment was the more important one. They stuck to that view at UNCTAD in Santiago and resisted many of the proposals from the developing countries there, much to the regret of this side of the House.
I know that the Minister for Overseas Development profoundly believes that private investment can provide employment and that that is one of the most urgent needs of the developing countries. He is right to believe that more employment is one of their most urgent needs. What is a matter of dispute is how far the injection of private investment can so provide employment as to assist the growth prospects of a developing country.
There is plenty of evidence of the flow of resources out of the Third World into the rich world, which is the product of private investment. Nevertheless, it is a matter for the developing country concerned to decide. If it wants to attract private investment, that is its right. Even a Socialist country like Tanzania, for example, from time to time seeks to attract private investment where it believes such investment has a job to do. But if the Government really believe that private investment has a development role to play in the Third World, it is surely most important that they should agree with us that private investment therefore has a responsible role to play and should be prepared to accept the responsibility it is right to expect it to undertake when it moves into the Third World.
10.45 p.m.
Most of our large companies which have by habit and practice invested in the Third World know very well what the problems are. We are not worried about them. We are worried about the British firm that perhaps has not done much investment in the developing world

and has not the experience of the Third World's relationships, practices and needs but may move, with the encouragement of the Bill and the cover it offers, toward investment in a developing country with a vague feeling that it is thereby escaping from the responsibilities of the sophisticated laws of Britain and from some of the obligations placed upon it here.
We recognise, and the right hon. Gentleman agrees, that of course a firm moving into a developing country should be ready to accept certain obligations and observe a decent code of conduct. The difference between us is that the Govern. ment believe we can leave this to be a matter between the firm and the developing country concerned, whereas we think that if the Government are legislating to assist private investment there is a certain obligation on the Government to ensure that the private firm is indeed observing a decent code of conduct.
I will not spell out our argument again at length because we are not anxious to prolong the discussion unduly, but I will summarise them. A firm which moves into a developing country must be prepared to recognise trade unions. It must be prepared to pay decent wages, not merely because this is a matter of social justice but because the payment of decent wages is a key element in savings and therefore in the growth of a developing country. Otherwise, on the Government's own reckoning, private investment loses its point.
The firm must be prepared to provide decent working conditions and to provide welfare facilities. It must go on to do other things which perhaps would not normally be expected of it in this count-try, or would at least be taken for granted. It must be ready to institute systems of training which will enable the local people eventually to take over the local management and technical control of the industry. It must not resist them. It must not invite the kind of expropriation against which the Bill provides an insurance, and if it seeks not to invite that kind of expropriation it must understand the context in which it has to invest, work and operate—and that context is that the people of the developing country will want at the earliest possible moment to manage their own industries. It must be ready to introduce training schemes and a system of employing management personnel from the developing country.
The second matter which perhaps we would not need to expect from a firm in this country, because we have legislated on matters of town and country planning, concerns some of the dangers to the environment. The developing countries have not reached such a sophisticated stage of legislation. Next month in Stockholm there is to be an international conference on the environment. Part of the code of conduct of any firm moving into a developing country should be that it will observe all conditions necessary to avoid the pollution of the environment. The laws the developing countries have not reached the stage of dealing with this.
What we propose is that if the Government so fervently believe in private investment as an element in the development of the Third World—this is their justification for the Bill, for the whole stance they take on aid and development—it would be totally illogical and unreasonable if they were not prepared to agree that it is part of their responsibility in administering this scheme to make sure that the firms that carry out direct private investment in the Third World adhere to a code of conduct which embodies the kind of things I have suggested, although we do not specify them in the Amendment. Otherwise we will believe that this is really a Bill to help private investment but not to help the Third World.

Mr. Cecil Parkinson: I start by welcoming the assurance given earlier by my right hon. Friend that the Bill will not be allowed to encourage enterprises which encouraged discrimination. This will he welcomed on all sides of the House and I would like to thank my right hon. Friend for his remarks. I could not help thinking, as I listened to the right hon. Lady the Member for Lanark (Mrs. Hart) repeating the arguments she put so eloquently and as forcibly in Committee, that we were rehearsing a well-worn argument. I have often wondered why the right hon. Lady does not accept the fact that we cannot just set a target for aid, and agree that it ought to be 1 per cent. of gross national product, without accepting that in a country like ours, because this is the way the majority prefer it, a vast proportion of the nation's resources is in private hands and it is therefore logical to look to that sector to provide a contribution

towards what we all accept as a worthwhile national objective, namely, aid for the development of the Third World.
It does not strike me as odd—quite the contrary—that the private sector should play its part and make its contribution towards the development of the Third World and towards meeting the target which we as a Government have accepted and which, I am proud to say, have met. In listening to the right hon. Lady I could not help thinking that perhaps because of her whole background and approach she has little understanding and even less sympathy with the way the private sector works. This perhaps leads her to attribute evil motives to the private sector and the idea that the private sector will go in with the one objective of maximising its return by ignoring all the things she regards as desirable. The right hon. Lady is totally wrong.
I declare my interest. I am chairman of my own group of companies and I employ people, but the way I maximise my profit is not by ignoring their wellbeing and welfare and by seeking to exploit them. The days when anybody sought to maximise profit that way are long gone and the way in which my partners and I and thousands of others in the same position seek to maximise profits is by helping those who work for us, by paying good wages, taking an interest in their welfare and ensuring that their interests are properly looked after.
I listened to a speaker at a seminar at lunchtime today and again tonight to the right hon. Lady the Member for Lanark making the same point that the way to make profit is by exploitation. It would be in her interests and that of the sanity of all of us if, before taking part in these debates, the right hon. Lady tried to find out, not how she thinks it works, but how the private sector really works. Her ideas are 20, 30 or 50 years behind the times.

Mrs. Hart: If the hon. Member reads the OFFICIAL REPORT tomorrow, he will find that I entirely agree with him about most firms which invest in the Third World and that I was talking about a tiny minority. I am sure that the hon. Member's firm is not in that minority.

Mr. Parkinson: I am grateful to the right hon. Lady for that. I have listened for seven or eight weeks and she might


believe that she has talked of her understanding of and confidence in the private sector, but that was not the impression she left with us. In spite of her few honeyed words, that was not the impression which came through. I am not convinced that that is how the right hon. Lady thinks of the private sector.
This is a good Bill and it puts responsibility firmly in the hands of the Export Credits Guarantee Department. The ECGD is left to apply commercial considerations. These do not exclude emphasis on welfare, wages and working conditions. I do not think the ECGD would be interested in backing a company which was even considering ignoring them. Therefore, in calling for a code of conduct the right hon. Lady and a number of her hon. Friends are demonstrating their lack of understanding of how the private sector works and their lack of confidence in the ECGD which administers huge sums of money very well.
I hope that my hon. Friends will reject the Amendment. If necessary, I shall have pleasure in supporting them in doing so.

Mr. Frank Judd: I am happy to have the opportunity to follow the hon. Member for Enfield, West (Mr. Parkinson), because his argument, however sincere, is not supported by the reality of the situation.
We all know of the economic involvement of British commercial and industrial interests in southern Africa, including the Republic of South Africa and to some extent in the Portuguese territories where profits are directly related to the exploitative nature of the country in which the operation is being undertaken.
We are pressing in the Amendment for an assurance that wherever Government and public support goes to a commercial and industrial enterprise operating in a situation like that, the enterprise will be able to set standards.
I often listen with much respect to those on the Government side who take a different attitude from mine about that part of the world and the way in which we approach its political problems, and who say that the way we should approach the problems and achieve change in Portuguese territories of southern Africa is not constantly to castigate them for

their wrongs but to become involved and try to change the situation from within.
People who argue like that cannot have it both ways. Those who believe that should' insist that where we in Britain propose to set up new methods of public support for areas like that, the firms and organisations involved there will set standards. That is what the Amendment is about. If the hon. Member for Enfield, West is sincere in what he says—and there is no reason to doubt it—about an approach to business, he will do nothing but welcome the Amendment and urge the Government to accept it.

11.0 p.m.

Mr. Parkinson: I am not seeking any praises, but I do not behave as I do because of the existence of any code of conduct.

Mr. Judd: Precisely. But there is no shortage of people who have the strongest possible reservations about becoming involved economically or industrially in the area we are discussing because they recognise that to become involved will inevitably associate them with the pernicious social policies followed by the Governments of that area. Therefore, if the Government are consistent in the statements and professions of good faith which they never miss an opportunity to make, they should welcome the Amendment.
The Government insisted in Committee that they reject the recommendations set out by the United Nations and others on the degree of public governmental and inter-governmental programmes towards development, and they believe that private investment is the way to achieve development in the developing countries. If they are serious, it is not good enough for them simply to favour successful commercial enterprises which can be justified in normal commercial terms. They must also be concerned with justifying such enterprises which, by definition, will receive public financial support in terms of social progress and the social emancipation of the people in the area.
One of the gravest problems in the developing countries is the chronic and mammoth problem of unemployment. In the major urban areas of developing countries outside China, with about 30 per cent. unemployment, there are 225


million people for whom work will have to be found in the next 10 years. We cannot remove the problem because these people have been born. If we try to justify the Bill in terms of development policy in the Third World, we shall want to see devised in a code of conduct methods which ensure that enterprises which receive public support tackle this problem of large-scale unemployment and will not become unduly capital-intensive when labour-intensive forms of development would be more relevant for the country in which the undertaking is being carried on.

Mr. Harold Soref: It was not my intention to intervene in the debate, but having an interest in this matter from day-to-day activities with the under-developed countries, and having heard the political content of the speeches of the right hon. Lady the Member for Lanark (Mrs. Hart) and the hon. Member for Portsmouth, West (Mr. Judd), I believe that we should come back to business realities. We were told by the right hon. Lady and by the hon. Gentleman we should observe a decent code of conduct and certain standards. Manufacturers and confirming houses in this country which have been dealing with these territories have been observing very high standards. The trouble has been that the people they have been dealing with in such countries have not observed such standards. Why the right hon. Lady and the hon. Gentleman should defend the sort of treatment which British manufacturers have received rather than recognise the difficulties of the confirming houses and manufacturers in this country, I do not know.
The job of a manufacturer or confirming house—and it is largely confirming houses involved in ECGD in this country—is to find markets where British goods are saleable. The creditworthiness of the market is the prime matter. We are concerned here with the employment of people in this country and the financial probity of the purchasers of our goods. This cannot be achieved unless we deal with countries and firms that honour their obligations. We have been told that we must concentrate on certain territories in the New World. Only this week Zambia, a developing country in Africa, has cancelled every permit that had been allocated to

her importers. Surely, if a country like South Africa can pay for the goods and her credit is good that is where our goods will be sold. That will mean employment for people in this country, which merits consideration by the House.
Those who have invested in the less developed parts of the world have frequently suffered confiscation of their assets and nationalisation, with enormous losses to firms in this country.

Mrs. Hart: On a point of order. I am sorry to interrupt the hon. Member for Ormskirk (Mr. Soref), whose contributions to our debates on aid and the Third World I frequently find interesting, but I fear that he has not read the Bill and is not addressing himself to the Amendment.

Mr. Soref: In reply to the right hon. Lady, I say that there are firms in this country which, because they have generously invested in and provided employment for the Third World, have suffered acutely. One confirming house after another in the City of London has gone bankrupt because it has provided generous facilities over the years building up unstable commercial undertakings in West and East Africa. I suggest that some consideration should be given to the investment of firms in the City of London which have always shown and are continuing to show zeal for the welfare of the people of the Third World and elsewhere.

Mr. Pavitt: I do not want to follow the remarks of the hon. Member for Ormskirk (Mr. Soref), who obviously knows more about commercial practice than he does about the Third World, but I will comment on the points made by my right hon. Friend the Member for Lanark (Mrs. Hart).
Our debate tonight reflects the debates in Committee between the parties on several issues, particularly on the question of what should be Government aid and what should be done by private investment. I support the Amendment. If the Government are claiming that aid is an integral part of our contribution to the problems of the Third World and if that aid is to be underwritten by the Government, the Government must at the same time accept that all investment and all exports should conform to the


arrangements made for technical assistance and technical aid.
Over the last 15 years there has been a tremendous development in the safeguards applied to ensure that bilateral and multilateral aid given by ourselves and through specialised agencies shall be used to the maximum benefit of the recipients. That is the whole object of the Bill, and our discussions in Committee rested on that point. The Amendment therefore is an absolute necessity.
The Guardian this morning said that it was about time we dropped the hypocrisy that commercial investment is aid because, if it is, Britain lives on United States aid. I think it is probably true. The investment is for parts of the world which desperately need our support in the next two or three decades. That being so, it is logical that there should be a code of conduct. Had the hon. Member for Ormskirk spent years, as many of us have, in developing countries looking at past exploitation he would know that what has happened there could have been prevented had there been a code of conduct. I am thinking particularly of India where I had the privilege of working with the United Nations for several years and where the result has been to unbalance the work done by Government and agencies which are trying to institute technical assistance and aid. Therefore, both parts should be governed by a code of conduct which will take those matters into consideration.

Mr. John Tilney: The hon. Member for Willesden, West (Mr. Pavitt) is right to say that this is a basic debate between the two sides of the House. The Opposition side by and large believes in a broad infrastructure. We on this side believe that private enterprise can do more to solve the problems of gross unemployment and underemployment in many cities of Africa and Asia. We believe that by going into partnership with local capital we shall help to solve unemployment problems and will produce added expertise and technological know-how, which is much easier to produce if this can be done by a small local company rather than by a massive government agency.
I have some sympathy with the idea behind the Amendment although I hope

the Government will reject it. The proposal can be better achieved by an adjustment of the premium organised by the ECGD. I do not see why a 1 per cent. programme across the board is a sensible arrangement. I hope that once we have learned a few lessons from this admirable Bill, for which many of us have been arguing for 12 years, there will be some knowledge of the risk involved.
Some countries are not as good to invest in as others. Equally some companies are better investments than others. I estimate that those who operate in South Africa will be much more suspect if they operate north of the Zambesi than those who have interests in Africa as a whole. If one goes into partnership with local capital, though this is in short supply, one finds that the company concerned is a safer investment in the African or Asian territory concerned. I am a believer in capitalism and I regard it as a good thing to spread the ownership of capital widely since it makes for a very much safer investment.
I urge my right hon. Friend the Minister when he replies to say that he believes in a flexible programme for the future rather than a statutory code of conduct.

Mr. T. H. H. Skeet: I think I understand what the right hon. Lady the Member for Lanark (Mrs. Hart) has in mind in her Amendment. She envisages a code of practice to which all firms going abroad should conform. The large firms are responsive to good conditions and want to pay good wages, and surely this is all a matter of common sense. My experience of investment abroad is that trading firms which break the rules will find that contracts will not come their way again. The investment will be regarded as bad and they will be let down.
There is no real sense in limiting this to private companies. Legislation is at present going through the House enabling the British Gas Corporation to operate abroad, as at the moment does the British Steel Corporation. Would they not be subject to a code of investment practice? The argument may be that they are responsible bodies. I accept that. Forty or 50 years ago there may have been good reasons why a code should have been laid down, but in these days when


firms have social consciences it is superfluous to bring in a provision of this kind. Therefore, I hope that my right hon. Friend is persuaded that this is not a point which it is necessary to include in the proposed legislation.

11.15 p.m.

Mr. Noble: I think that most of us share the objectives of right hon. and hon. Members opposite. Despite that, I am unable to accept their Amendment. In the first place it is totally unnecessary. As hon. Members are aware, the ECGD as a prudent insurer will make it a condition of its cover that the investor obeys all local laws and regulations and that the investment is acceptable to the host country. The right hon. Lady the Member for Lanark (Mrs. Hart) said that the difference between us was that we wanted to leave matters to the firm and the host country. It is more than that. Through the ECGD we shall have considerable control in terms of seeing that firms obey what the countries want and the way in which they want the operations to work.
In addition, the ECGD will not be liable for any loss arising from the provocative behaviour of the investor. If a firm misbehaves itself in relation to local laws and loses its investment, it will get no cover from the ECGD. The ECGD is also seeking ways of limiting cover in the event of extortionately high remittances, and it will avoid projects likely to offend against the mores or sensitivities of the country concerned.
I think that these conditions of insurance cover all the main points which would be contained in a code of conduct. I do not think that a code of conduct would be an improvement since inevitably it would have to be drawn up in general terms, because what is valid for one country is not necessarily valid for another. I take the point that such a code would not comprise conditions in respect of working conditions or labour relations. But right hon. and hon. Members are aware that we think that matters of this sort are a subject more appropriate for the host Government, and it is difficult to see why the investor should be required to go further than obeying the local laws and regulations.
The right hon. Member for Lanark said that firms must not invite expropria-

tion. Certainly that is true. As my hon. Friend the Member for Enfield, West (Mr. Parkinson) pointed out, however, the right hon. Lady is a little out of touch with what developing countries are now doing. There has been a considerable change. There is practically no opportunity anywhere in the world for 100 per cent. ownership of businesses. Quite rightly, the movement is towards partnerships.
It would be quite intolerable if this House laid down, as the right hon. Lady half suggested, a code of conduct saying that a firm must not create pollution or that it must work always with trade unions or something else that the host country might not want in the event of a firm being invited to work in cooperation with a country or in co-operation with industries that it was setting up.
In the ways in which I have suggested, I believe that we are meeting all the real points at issue between the two sides of the House. With great respect to any hon. Member opposite who does not know how the ECGD works, it is extremely careful in the way that it——

Sir Geoffrey de Freitas: I know the ECGD.

Mr. Noble: I know that the right hon. Gentleman does.

Mr. Judd: Will the right hon. Gentleman confirm in words of one syllable that what he has just said means that if public money is going to support industrial activity in South Africa under this scheme, any firm operating in the scheme must accept all the social legislation of the South African Government, apartheid and the rest?

Mr. Noble: The hon. Gentleman's point is a fair one. What I have said is that credits will be given only to those companies which are operating in countries which are wanted by the host Governments and which obey the rules and regulations of those countries.
It is just as unrealistic to quote South Africa as it may be to quote a whole host of other countries, such as Russia and China, whose form of political Government we do not approve of. If there is any real meaning in trade, it is that we should trade with people irrespective of their political views.

Mrs. Hart: There is a difference, because in Committee the right hon. Gentleman resisted Amendments which were concerned with precluding investment in South Africa, Greece and Portugal. He cannot argue that this is a Bill to promote British commercial interests and at the same time say that it is a Bill to promote the interests of developing countries. We are concerned with the interests of developing countries.

Mr. Noble: I do not believe that the right hon. Lady is talking any sense at all. The Pearson Committee, which has been quoted before, looked at the whole problem of developing countries

and said that in many cases investment was a most important part of their development. The right hon. Lady can say that she thinks that report is rubbish. She has a perfectly good reason for saying so, but neither the developing countries nor the Pearson Report have ever said that they want no investment. All we are doing is providing it on a sensible and reasonable basis, and I cannot accept the Amendment.

Question put, That the Amendment be made:—

The House divided: Ayes 191, Noes 197.

Division No. 192.]
AYES
[11.20 p.m.


Allaun, Frank (Salford, E.)
Ginsburg, David (Dewsbury)
McNamara, J. Kevin


Archer, Peter (Rowley Regis)
Golding, John
Mahon, Simon (Bootle)


Armstrong, Ernest
Gordon Walker, Rt. Hn. P. C.
Mallalieu, J. P. W. (Huddersfield, E.)


Ashton, Joe
Grant, George (Morpeth)
Marquand, David


Atkinson, Norman
Grant, John D. (Islington, E.)
Marsden, F.


Bagier, Gordon A. T.
Griffiths, Eddie (Brightside)
Marshall, Dr. Edmund


Barnett, Joel (Heywood and Royton)
Griffiths, Will (Exchange)
Mason, Rt. Hn. Roy


Benn, Rt. Ho. Anthony Wedgwood
Hamling, William
Mellish, Rt. Hn. Robert


Bennett, James (Glasgow, Bridgeton)
Hannan, William (G'gow, Maryhill)
Mendelson, John


Bidwell, Sydney
Hardy, Peter
Mikardo, Ian


Bishop, E. S.
Harper, Joseph
Millan, Bruce


Blenkinsop, Arthur
Harrison, Walter (Wakefield)
Miller, Dr. M. S.


Boardman, H. (Leigh)
Hart, Rt. Hn. Judith
Milne, Edward


Booth, Albert
Hattersley, Roy
Mitchell, R. C. (S'hampton, lichen]


Brown, Hugh D. (G'gow, Provan)
Healey, Rt. Hn. Denis
Molloy, William


Brown, Ronald (Shoreditch &amp; F'bury)
Hooson, Emlyn
Moraan Elvstan (Cardlaanshire)


Buchan, Norman
Horam John
Morns, Alfred (Wythenshawe)


Buchanan, Richard (G'gow, Sp'burn)
Houghton, Rt. Hn. Douglas
Morris, Rt. Hn. John (Aberavon)


Campbell, I. (Dunbartonshire, W.)
Howell, Denis (Small Heath)
Moyle, Roland


Carmichael, Neil
Huckfield, Leslie
Mulley Rt. Hn. Frederick


Carter, Ray (Birmingham, Northfield)
Hughes, Rt. Hn. Cledwyn (Anglesey)
Murray, Ronald King


Castle, Rt. Hn. Barbara
Hughes, Mark (Durham)
Oakes, Gordon


Clark, David (Colne Valley)
Hughes, Roy (Newport)
O'Halloran, Michael


Cocks, Michael (Bristol, S.)
Hunter, Adam
Oswald Thomas


Cohen, Stanley
Janner, Greville
Paget, R. T.


Concannon, J. D.
Jay, Rt. Hn. Douglas
Palmer Arthur


Conlan, Bernard
Jenkins, Hugh (Putney)
Parry Robert (Liverpool Exchange!


Cox, Thomas (Wandsworth, C.)




Craws haw, Richard
John, Brynmor
Pavitt, Laurie


Dalyell, Tarn
Johnson, James (K'ston-on-Hull, W.)
Pendry, Tom


Davidson, Arthur
Johnson Russell (Inverness)
Pentland, Norman


Davis, Clinton (Hackney, C.)
Jones, Barry (Flint, E.)
Perry, Ernest G.


Davis, Terry (Bromsgrove)
Jones, Dan (Burnley)
Prentice, Rt. Hn. Reg.


Deakins, Eric
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Prescott, John


de Freitas, Rt. Hn. Sir Geoffrey
Jones, Gwynoro Carmarthnen)
price, William (Rugby)


Dempsey James
Jones, T. Alec (Rhondda, W.)
Probert, Arthur


Doig, Peter
Kaufman, Gerald
Reed, D. (Sedgefield)


Dormand, J. D.
Kinnock, Neil
Rees, Merlyn (Leeds, S.)


Douglas, Dick (Stirlingshire, E.)
Lambie, David
Rhodes, Geoffrey 


Douglas-Mann, Bruce
Lamborn, Harry
Rodgers, William (Stockton-on-Tees)


Driberg, Tom
Lamond, James
Roper, John


Duffy A. E. P
Latham, Arthur
Rose, Paul B.


Dunn, James A.
Lawson, George
Ross, Rt. Hn. William (Kilmarnock)


Eadie, Alex
Leadbitter, Ted
Rowlands, Edward


Ellis, Tom
Leonard, Dick
Sheldon, Robert (Ashton-under-Lyne)


English, Michael
Lestor, Miss Joan
Shore, Rt. Hn. Peter (Stepney)


Evans, Fred
Lever, Rt. Hn. Harold
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)


Faulds, Andrew
Lipton, Marcus
Silkin, Rt. Hn. John (Deptford)


Fernyhough, Rt. Hn. E.
Lomas, Kenneth
Silkin, Hn. S. C. (Dulwich)


Fisher, Mrs. Doris (B'ham, Ladywood)
Lyon, Alexander W. (York)
Sillars, James


Fitch, Alan (Wigan)
Lyons, Edward (Bradford, E.)
Skinner, Dennis


Fletcher, Raymond (llkeston)
McBride, Neil
Small, William


Fletcher, Ted (Darlington)
McCartney, Hugh
Spearing, Nigel


Foley, Maurice
McElhone, Frank
Spriggs, Leslie


Foot, Michael
McGuire, Michael
Stallard, A. W.


Forrester, John
Mackenzie, Gregor
Steel, David


Galpern, Sir Myer
Maclennan, Robert
Stonehouse, Rt. Hn. John


Gilbert, Dr. John
McMillan, Tom (Glasgow, C.)
Strang, Gavin




Summerskill, Hn. Dr. Shirley
Walker, Harold (Doncaster)
Wilson, Alexander (Hamilton)


Swain, Thomas
Weitzman, David
Wilson, William (Coventry, S.)


Thomas, Rt. Hn. George (Cardiff. W.)
Wellbeloved, James
Woof, Robert


Torney, Tom
Wells, William (Walsall, N.)



Tuck, Raphael
White, James (Glasgow, Pollok)
TELLERS FOR THE AYES:


Urwin, T. W.
Whitehead, Phillip
Mr. James Hamilton and


Varley, Eric G.
Williams, Alan (Swansea, W.)
Mr. Donald Coleman.


Wainwright, Edwin
Williams, W. T. (Warrington)





NOES


Alison, Michael (Barkston Ash)
Haselhurst, Alan
Parkinson, Cecil


Allason, James (Hemel Hempstead)
Havers, Michael
Percival, Ian


Astor, John
Hayhoe, Barney
Powell, Rt. Hn. J. Enoch


Atkins, Humphrey
Heseltine, Michael
Proudfoot, Wilfred


Baker, Kenneth (St. Marylebone)
Hicks, Robert
Pym, Rt. Hn. Francis


Benyon, W.
Higgins, Terence L.
Raison, Timothy


Biffen, John
Hiley, Joseph
Ramsden, Rt. Hn. James


Blaker, Peter
Hill, James (Southampton, Test)
Redmond, Robert


Boscawen, Hn. Robert
Holland, Philip
Reed, Laurance (Bolton, E.)


Bossom, Sir Clive
Holt, Miss Mary
Rees, Peter (Dover)


Bray, Ronald
Howell, Ralph (Norfolk, N.)
Rhys Williams, Sir Brandon


Brinton, Sir Tatton
Hunt, John
Ridley, Hn. Nicholas


Blocklebank-Fowler, Christopher
Hutchison, Michael Clark
Roberts, Michael (Cardiff, N.)


Brown, Sir Edward (Bath)
Iremonger, T. L.
Roberts, Wyn (Conway)


Bruce-Gardyne, J.
Irvine, Bryant Godman (Rye)
Rossi, Hugh (Hornsey)


Bryan, Paul
James, David
Rost, Peter


Buchanan-Smith, Alick (Angus, N &amp; M)
Jennings, J. C. (Burton)
Royle, Anthony


Butler, Adam (Bosworth)
Jones, Arthur (Northants, S.)
Sandys, Rt. Hn. D.


Carlisle, Mark
Kaberry, Sir Donald
Shaw, Michael (Sc'b'gh &amp; Whitby)


Channon, Paul
Kershaw, Anthony
Shelton, William (Clapham)


Chapman, Sydney
King, Evelyn (Dorset, S.)
Simeons, Charles


Chataway, Rt. Hn. Christopher
King, Tom (Bridgwater)
Skeet, T. H. H.


Churchill, W. S.
Kinsey, J. R.
Smith, Dudley (W'wick &amp; L'mington)


Clark, William (Surrey, E.)
Knight, Mrs. Jill
Soref, Harold


Clarke, Kenneth (Rushcliffe)
Knox, David
Speed, Keith


Clegg, Walter
Lamont, Norman
Spence, john


Cockeram, Eric
Lane, David
Stainton Keith


Coombs, Derek
Langford-Holt, Sir John
Stanbrook, Ivor


Corfield, Rt. Hn. Frederick
Legge-Bourke, Sir Harry
Stewart-Smith, Geoffrey (Belper)


Cormack, Patrick
Le Marchant, Spencer
Stoddart-Scott, Col. Sir M.


Crouch, David
Lloyd, Ian (P'tsm'th, Langstone)
Stuttaford, Dr. Tom


Crowder, F. P.
Loveridge, John
Sutcliffe, John


Davies, Rt. Hn. John (Knutsford)
Luce, R. N.
Tapsell, Peter


d'Avigdor-Goldsmid, Maj.-Gen. James
MacArthur Ian
Taylor, Edward M. (G'gow, Cathcart)


Dean, Paul
McCrindle, R. A.
Taylor, Frank (Moss Side)


Deedes, Rt. Hn. W. F.
McNair-Wilson, Michael
Tebbit, Norman


Digby, Simon Wingfield
McNair-Wilson, Patrick (New Forest)



Dodds-Parker, Douglas
Maddan Martin
Temple, John M.


Drayson, G. B.
Mather, Carol
Thomas, John Stradling (Monmou


du Cann, Rt. Hn. Edward
Mawby, Ray
Thomas, Rt. Hn. Peter (Hendon, S)


Elliot, Capt. Walter (Carshalton)
Maxwell-Hyslop, R. J.
Thompson, Sir Richard (Croydon, S)


Eyre, Reginald
Meyer, Sir Anthony
Tilney, John


Fenner, Mrs. Peggy 
Mills, Stratton (Belfast, N.)
Trafford, Dr. Anthony


Finsberg, Geoffrey (Hampstead)
Miscampbell, Norman
Trew, Peter


Fisher, Nigel (Surbiton)
Mitchell, Lt.-Col. C. (Aberdeenshire, W)
Tugendhat, Christopher


Fletcher-Cooke, Charles
Mitchell, David (Basingstoke)
Turton, Rt. Hn. Sir Robin 


Fortescue, Tim
Moate Roger
van Straubenzee, W. R


Foster, Sir John
Money, Ernle
Vickers, Dame Joan


Fowler, Norman
Monks, Mrs. Connie
Waddington, David


Fox, Marcus
Monro, Hector
Walker-Smith Rt. Hn. Sir Derek


Gardner, Edward
Montgomery, Fergus
Wall, patrick


Gibson Watt David
More, Jasper
walters, Dennis


Gilmour Sir John (Fife E.)
Morgan, Geraint (Denbigh)
Ward, Dame Irene


Glyn, Dr. Alan
Morgon-Giles Rear-Adm.
Weatherill, Bernard


Goodhart, Philip
Morrison, Charles
Wells, john (Maidstone)


Goodhew, Victor
Mudd, David
White, Roger (Gravesend)


Gower, Raymond
Murton, Oscar
Wilkinson, John


Grant, Anthony (Harrow, C.)
Nabarro, Sir Gerald
Winterton, Nicholas


Gray, Hamish
Neave, Airey
Wolrige-Gordon, Patrick


Green, Alan
Nicholls, Sir Harmar
Wood, Rt. Hn. Richard


Grylls, Michael
Noble, Rt. Hn. Michael
Woodnutt, Mark


Gummer, J. Selwyn
Normanton, Tom
Worsley, Marcus


Gurden, Harold
Oppenheim, Mrs. Sally
Younger, Hn. George


Hall, John (Wycombe)
Osborn, John



Hall-Davis, A. G. F.
Owen, Idris (Stockport, N.)
TELLERS FOR THE NOES:


Hamilton, Michael (Salisbury)
Page, Graham (Crosby)
Mr. Paul Hawkins and


Hannam, John (Exeter)
Page, John (Harrow, W.)
Mr. Michael Jopling.

Question accordingly negatived.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed.

HOVERCRAFT

11.32 p.m.

The Minister for Trade (Mr. Michael Noble): I beg to move,
That the Hovercraft (Application of Enactments) Order 1972, a draft of which was laid before this House on 4th May, be approved.
The purpose of the order is to apply to hovercraft, with necessary modifications, certain enactments and instruments relating to ships, aircraft and motor vehicles. The order is made under the Hovercraft Act, 1968, an enabling Act which has very little practical effect until Orders in Council are made under it. The first Order in Council to be made under the Act, concerning civil liability in respect of hovercraft, was made last year. A further order, the Hovercraft (General) Order, 1972, which makes provision for the registration and safety regulation of hovercraft, was made on 28th April and was laid before this House under the negative procedure on 8th May. The Hovercraft (Application of Enactments) Order, 1972, for which I am seeking the approval of the House this evening, is the third order.
Prior to the passage of the Hovercraft Act in 1968, hovercraft were often treated either as ships or aircraft, but there was much confusion because it was impossible to say with certainty that they were one or the other. Although the Act defined hovercraft and provided for their treatment as vehicles in their own right, it has still been possible, since the passage of the Act, to treat hovercraft as ships or aircraft, for what it is worth; and for certain purposes, hovercraft have in fact been so treated.
The present order will remove much of this uncertainty by applying to hovercraft, where relevant, the law relating to ships, aircraft and motor vehicles. Having done this, the process of giving the hovercraft an existence in its own right will have been almost completed. Any remaining doubt that the hovercraft, in United Kingdom

law, is a distinct type of vehicle will be removed when a further order has been made, as we intend to do shortly, bringing into operation Section 4(3) of the Act, which provides that a hovercraft shall not be treated as a ship, aircraft or motor vehicle, except to the extent that this was already specifically provided for when the Act was passed.
The enactments and instruments which are applied to hovercraft by this order fall into a number of categories which I shall attempt briefly to describe. These enactments and instruments, with the modifications it has been felt necessary to make, are given in Articles 4 to 9 and the associated Schedules 1 to 4. First there are enactments and instruments dealing with shipping and navigation. For instance, the order applies to hovercraft parts of the Merchant Shipping Act, 1894, dealing with the avoidance of collisions at sea, with the carriage of dangerous goods, and with the investigation of casualties. The modified Collision Regulations applied to hovercraft require, for example, that when under way and supported on the air cushion, they shall carry an amber light flashing 60 times a minute visible all round at a distance of at least five miles. It also brings together the provisions in a number of enactments and instruments relating to wreck, salvage and distress and applies them, with modifications, to hovercraft.
There is another group of enactments and instruments which the order applies to hovercraft. These regulate the carriage of animals and plants in ships and aircraft, and the same regulations will therefore now apply to hovercraft.
Next, the order applies parts of enactments relating to the Army, Navy and Air Force and applies the appropriate National Insurance legislation to hovercraft.
In this connection, I should draw the attention of the House to a slight printing error on page 11 of the draft order. The reference to paragraph (2), in brackets, of Part 1 of Schedule 1 to the National Insurance (Industrial Injuries) Act, 1965, should be without brackets. There should also be a closed bracket after "1972" in the same sentence. This will be corrected when the order is made.
The aviation legislation which the order applies to hovercraft includes parts of the


Civil Aviation Act, 1949, which will give harbour and conservancy authorities certain powers to make by-laws and will enable the Secretary of State for Trade and Industry to make regulations on the registration of births, deaths and missing persons on or from hovercraft.
Section 27 of the Civil Aviation Act, 1971, is also applied and the effect of this will be to require the Civil Aviation Authority, which is being given the function of certifying the safety of hovercraft in the Hovercraft (General) Order, 1972, to consult with the Airworthiness Requirements Board on technical matters connected with this function.
Finally, the order applies the Insurance Companies Acts, 1958 to 1967, to hovercraft, thus enabling the business of insuring hovercraft to be classified for the purposes of those Acts, and substitutes the word "hovercraft" in certain existing enactments where the term "hover vehicles" has been used.

11.37 p.m.

Mr. Albert Booth: The vehicle to which this Statutory Instrument relates has been developed more rapidly than any other form of transport. It has been changed from a highly experimental prototype to a competitive commercial service vehicle on international ferry routes in a single decade.
Those who are developing and operating the hovercraft are enthusiasts. They are convinced that it is a vehicle with a wonderful future, and the spirit one finds in talking to them can evoke only admiration. It is therefore all the more disappointing that the legislation reflects none of this spirit.
In the first instance, the legislation fails to grasp the difficult but vital problem of definition. Article 2 of the order, headed "Application", does no more than to say that hovercraft are not hovertrains. So, for a definition of the vehicle, one is forced back to the Hovercraft Act, 1968, and the definition there is so wide that it can virtually be applied to any air cushion vehicle.
It has been apparent for years that there are many other applications of the air cushion principle than for marine hovercraft. Cross-country hovertrailers have been developed to move loads where conventional methods of transport cannot be used. In fact, the pipes which will

carry the North Sea gas through Scotland have been placed on and taken across bog land by hovertrailers as they are able to operate in areas where wheeled vehicles have been lost beneath the surface.
A hovertrailer has been developed for the purpose of recovering disabled aircraft. In fact, prior to this development, sometimes more damage was done to aircraft in trying to bring them in from the places where they had inadvertently landed than by the crashes themselves.
Those developments of the air cushion principle covered by the definition in the 1968 Act are totally inappropriate to be embraced by regulations such as those in the present order. Yet there is no doubt that Article 2 will catch all such applications of the air cushion principle. In addition, there have been methods developed for moving large tanks to position them at oil refineries using the same principle, and these also are caught by the order.
It is essential that an attempt should be made to settle on a satisfactory definition. Otherwise, we shall apply to developments and applications of the air cushion principle undesirable restrictions which would put a brake on a valuable line of advance.
I do not wish to make only destructive criticism, so I come now to a way in which, I suggest, the matter can be resolved. I suggest that a provision be added to Article 2 making clear that the whole order applies only to those hovercraft which have installed within them the means of providing their own airlift and have installed on them the means of providing their own traction. If that were done, it would at once divide those hovercraft with which we should be concerned from all the other applications of the principle which should be subject to a different kind of regulation.
Articles 4, 5 and 6 invoke the provisions of about 57 Acts of Parliament apart from the original Act and 96 Statutory Instruments. It is hardly a tidy way to legislate. Hovercraft operators will need a law library on their shelves to ascertain what constitutes legal operation of hovercraft. The main beneficiaries, it seems to me, will be the lawyers. I do not envy the task of any hovercraft operator who sets out to read all the statutes listed in the Schedules to find out how he is affected.
One is almost tempted to suggest there should be a major consolidation Measure even before we have got through the principal orders to be laid under the Hovercraft Act, 1968.
It is not stretching the truth to say that the only new law which the order brings into force is the requirement to show a flashing amber light capable of being seen 60 times a minute up to five miles away.
Article 7(1) provides that the Insurance Companies Acts, 1958 to 1967,
shall have effect as if any reference therein to vessels or aircraft' included a reference to hovercraft".
In those Acts, there is one case only where there is not the combined reference to vessels and aircraft. This point was taken up with the Department by the Select Committee on Statutory Instruments, and it is agreed that the meaning of "vessels or aircraft" is the same as "vessels and aircraft". Therefore, the only exclusion which will apply is the reference in Section 59(4)(e) of the Companies Act, 1967 relating to vessels alone.
That provision of the Companies Act has the effect of excluding aircraft, and, presumably, hovercraft now, from insurance against risks incidental to construction and repair for the purposes of Part II of the Companies Act. Is this intentional? Is it suggested that any contract of insurance for repair or construction of a hovercraft should be carried out without the restrictions applying to insurance under Part II of the Companies Act? If that is the intention it would seem to require some justification, particularly in view of the larger types of hovercraft that are being developed, and that can be envisaged. Since the definition, or lack of it, can be seen clearly in Article 2, this point should be explained before the order is approved.
On Article 7(2) I should like to know what consideration has been given to the need for the sort of expertise which is possessed by marine insurance underwriters in contracting insurance for hovercraft which operate on the sea. As I read the Article it would appear that it makes specific provision to allow a motor insurance company to work in this sphere. This might be desirable for hovercraft operating on land. But there is a special expertise needed in marine

insurance, particularly in view of the salvage and other claims that can be involved. In addition, certain car insurance firms have not proved very reliable for car risks and therefore, for the public to feel totally safe about insurance when they travel on hovercraft, particularly over the sea, they might feel happier if they knew that the hovercraft was covered by a highly reputable marine insurance company.
As for the Schedules, I am interested in the application of the Merchant Shipping (Safety Convention) Act, 1949. It appears that a part of Section 23(3) is not being applied to hovercraft. That is the part about vessels being unsafe due to improper loading. Why is this provision deleted? Is there any evidence to suggest that loading might not be a factor in the safety of hovercraft? From the advice I was given by hovercraft pilots when I travelled with them to discover their attitude towards legislation. I was convinced that the opposite was the case and that the loading of hovercraft could be a very important factor in stability, in particular conditions of seaway. Its omission appears to require some explanation.
In the light of Article 9 dealing with the investigation of casualties, I hope the Minister will agree that it is appropriate to ask whether the Article has a special significance as a result of the capsizing of the SRN 6 hovercraft in the Solent in March with the loss of life. Hon. Members should know whether this hovercraft was operating in breach of the regulations that were then in force. I appreciate that this argument is equally applicable in other circumstances, but it appears to me to be appropriate here as well. This type of hovercraft was quite rightly considered a very safe vehicle and it capsized in what might well have been freak conditions. This raises serious questions, including that of whether the hovercraft was being operated in accordance with the regulations. It also poses the question whether the regulations then in operation were considered by the operators to be outdated by the fact that the hovercraft had been developed to a higher standard since the regulations were issued. It is fair to ask whether the operators were acting in breach of the regulations believing that they were outdated and that they had a vehicle


which could be operated to higher standards.
I want to make it clear that I am not seeking to raise any fears about the safety of the SRN 6 hovercraft or any other hovercraft operated by British operators. Quite the contrary. The operating record, with the single exception of which I have spoken, is very creditable. But the House is entitled to know the outcome of the inquiry conducted by the Department. It is of the utmost importance that any doubt which remains as a result of that accident should be removed.
Legislation can make an important contribution to the development of the hovercraft as a very safe and convenient mode of transport. If we can do this and British developers of hovercraft can prove by operation in the difficult sea conditions around our coast the full potential of the hovercraft, it will not only benefit those who travel in it around our own coasts but will help it realise its proper export potential, to the economic benefit of the country.

11.52 p.m.

Mr. Mark Woodnutt: I am sorry the hon. Member for Barrow-in-Furness (Mr. Booth) even suggested that there is anything in the order that has been put in because of the tragedy on the Solent. We all know that it was the intention way back in 1968, when we passed the Hovercraft Act, that it should be followed by such orders.
I have no doubt that the tragedy was because of freak conditions. I travelled over in another hovercraft exactly 20 minutes later with the managing director of Hovertravel, and although it was not very pleasant we landed without any difficulty. We know the technical explanation for what happened.
I do not think it it is charitable of the hon. Gentleman not to give the order a word of welcome, because his Government had two years to introduce such an order, which should have been introduced long ago. The hon. Gentleman wondered about any breach of regulations There were no regulations. The Act is just a shell, enabling the Government to introduce orders to lay down regulations.
I have taken the trouble since the order became available to send copies to every

manufacturer—the Isle of Wight is the home of hovercraft—and to all the operators, asking them for their comments. I have had no adverse comments. I telephoned various people on Sunday afternoon as I had not heard from them to ask them whether they had any comments. They had all read the order thoroughly and had no word of criticism. This is very welcome.
My only criticism is that the order comes rather late. We should have had the situation clarified long ago as to which Acts applying to shipping and aircraft are applied to hovercraft.
The hon. Gentleman said the order should have been wider, and mentioned the air cushion principle that has been applied to moving things across the land—on farms and so on. But the major application of the hovercraft is an operational one across water, to take people across the Channel and across the Solent twetween the Isle of Wight and the mainland. It is clearly in that area that we must have the position clarified. That is precisely what the order does, and I welcome it.

11.55 p.m.

Rear-Admiral Morgan-Giles: For a number of years, there has been discussion about what a hovercraft is, and it is an ingenious solution that it should be both a ship, an aircraft and a motor vehicle. If that it what the Government want, so be it.
There is much good sense in page 15 of the order concerning the provisions of the regulations dealing with collision at sea. It is thoroughly practical and sensible.
One point which has not been made in the debate is that hovercraft are far too noisy. Cowes Harbour is intolerable when they are going in and out. I hope that in future developments manufacturers will devote a lot of attention to making them much quieter. They will be more acceptable to the public if they are.
I must comment on the exoctic titles of previous legislation. For example, the Importation of Cats and Dogs Order, 1928, and the Non-Indigenous Rabbits (Prohibition of Importation and Keeping) Order, are a comment on the way our legislation is handled in this House and show how urgent it is to rationalise a


whole mass—or perhaps I should say, morass—of legislation.

11.57 p.m.

Mr. Patrick McNair-Wilson: I reinforce the comment made by the hon. Member for Barrow-in-Furness (Mr. Booth) regarding cushioned vehicles which do not strictly fall under the heading of "hovercraft". The Managing Director of Air Cushion Equipment Limited, which includes Hover-trailers International Limited and Mackley Ace Limited, lives in my constituency and is responsible for precisely this type of vehicle. I am aware of the very difficult situation regarding the definition of a hovercraft. This sort of thing must arise when one is dealing with a technological innovation.
These hovertrailers have no motive power of their own. They rely upon a segmented skirt which provides a cushion of air on which they can travel, and this is really merely a means of replacing the wheel, the wing, the track or the hull of a normal vehicle. They are not, therefore, self-propelled. They carry no passengers. Nor do they operate on the public highway. They are used for some of the purposes described to us, like the moving of civil engineering equipment and construction material, pipe lines and oil rigs over rough or marshy ground. They are usually towed or sometimes winched.
The fact is that they could never be described as falling within the ambit of these regulations. Has my right hon. Friend given consideration to exempting this type of vehicle, which is really no more than a trailer, since it is always covered, wherever it operates, under a contractor's right of access or way leave and would not fall within these regulations? The company to which I have referred is engaged in a great deal of Government and export work and unless the law can be made clear in its case it may well find its own contracts in some difficulty. I ask my right hon. Friend to consider exempting such vehicles and making sure that they are not unduly affected by the regulations.

12 midnight.

Sir Harry Legge-Bourke: I ought to mention that the hovertrain experiment is taking place largely within my constituency and that it is being speci-

fically excluded from the order. The previous Government were mainly responsible for considerable confusion about the hovercraft generally, because they never made up their mind whether for licensing purposes it was to be regarded as a road vehicle or a seagoing vessel. I deply regret that this order does not include any reference to the question of whether a hovercraft should be dutiable from the point of view of fuel as though it were a road vehicle or a vessel. My view is that the future of the hovercraft is perhaps greater over land than over water. This order deals mainly with hovercraft travelling over water rather than land.
As I understand it, the reason for the hovertrain being excluded is that it will have a track of its own and the propulsion will also be different from the hovercraft we know so far. I believe that the form of propulsion will have a huge world-wide application, and I would regard this order as a temporary one at best. Sooner or later we shall have to have an order to cover hovertrains too. The form of propulsion of that vehicle may well be the future form of propulsion for hovercraft, certainly over land.
The great value of the order is that it has brought to the attention of Parliament the importance of this type of transportation, and my belief is that we are seeing this type of vehicle in its infancy. As the hon. Member for Barrow-in-Furness (Mr. Booth) said, the speed with which this has come upon transportation is absolutely incredible when compared with other methods.
So far as this order regularises transport over sea I suppose it is all right, but I have some sympathy for those who say they are not entirely conversant with the Epizootic Lymphangitis Order of 1938 which I note is one of the orders which have been applied to hovercraft. There is a fantastic list of orders dating back a considerable number of years. I see one for 1919. The Sheep Scab Order of 1938 as amended is another which presumably affects the carriage of animals in a hovercraft. I have yet to learn that they are being used as goods vehicles. Maybe they will be in future.
Sooner or later we shall have to concentrate on carrying passengers at speeds passenger train, over large distances not considerably faster than the advanced


only in the United Kingdom but more frequently on the Continent. As long as this order is accepted as being of a temporary nature and it is realised that we will have to debate hovercraft and hovertrains in a great deal more detail I give the order my blessing.

Mr. Noble: I welcome this short and interesting debate. I at once apologise to all those who have made the point tonight and to those reading this order, for the extraordinary complication of it. I was amazed by the hard work of the firms in the constituency of my hon. Friend the Member for Isle of Wight (Mr. Woodnutt) who were able to comprehend it sufficiently to say that they understood it all perfectly on Sunday.
My hon. Friend the Member for Isle of Ely (Sir H. Legge-Bourke) asked about hovertrains. We will have to draft different regulations for them as soon as they get nearer to the development stage and are likely to be used.
It is true in general, as the hon. Member for Barrow-in-Furness (Mr. Booth) said in opening, that this whole series of hovercraft projects is extremely exciting and, because they are developing in such a large number of ways more or less simultaneously, this order tries to deal with the immediate problems and to cover in general some of those types which are beginning to be used.
I can understand the worry of my hon. Friend the Member for New Forest (Mr. Patrick McNair-Wilson) who asked about the type of equipment being manufactured by Air Cushion Equipment Limited. Many systems are hovercraft within the definition of the Hovercraft Act, 1968, and the orders will apply, and are intended to apply, to them. That is because in this area there is considerable development, but we recognise that the hazards arising from the operation' of some of the equipment my hon. Friend the Member for New Forset and the hon. Member for Barrow-in-Furness talked about are minimal compared with those associated with other types of hovercraft, and we are discussing with the manufacturers the extent to which we can give exemption to them from parts of the orders because we do not want this type of development to be held up.
The hon. Member for Barrow -in-Furness asked whether I could make a state-

ment on the investigation into the recent accident in The Solent. I do not think I can do so yet. The investigation of the accident has taken longer than we anticipated at first, and it is still too early to say definitely why it happened. We are pressing on with the investigations as fast as possible and I will inform the House about them as soon as possible.
In the meantime, such lessons as have emerged from the inquiries have been fed back to the operators in order to minimise the risk of a repetition and appropriate conditions will be imposed in the operating permits, which will be issued under the Hovercraft (General) Order. 1972, reflecting the results of the inquiries.
In answer to other questions, improper loading is a factor in the safety of hovercraft. Great attention will be given to this in granting permits under the Hovercraft (General) Order, 1972, which comes into force on 26th June this year.
The hon. Member for Barrow-in-Furness asked about insurance. It is correct that insurance of the construction of hovercraft will be classified in the same way as the construction of aircraft rather than of vessels. It will not, therefore, be treated as marine, aviation and transport business, but as property insurance business. This was thought reasonable as the original construction of hovercraft was mainly undertaken by aviation interests. However, I understand that the definition of marine aviation in transport legislation as regards ships and hovercraft is due for revision in future companies legislation.
The hon. Member for Barrow-in-Furness asked whether we could be more specific about the definition of hovercraft, but to some extent the hon. Member has answered his own question by explaining how rapidly this type of machine is being developed. We have deliberately drawn the definition wide enough to include all vehicles using the principle of air cushion. He suggested an amendment of the order. That is not possible. The order must be accepted or rejected by the House, and I believe the House would like to accept this order.

Question put and agreed to.

Resolved,
That the Hovercraft (Application of Enactments) Order 1972, a draft of which was laid before this House on 4th May, be approved.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hawkins.]

SCOTTISH PRISONS (INDUSTRIAL PRODUCTION)

12.10 a.m.

Mr. Adam Hunter: I raise this matter on the Adjournment with some diffidence, for I recognise the sociological interest which surrounds the quality of prison life. I would not deny that the treatment of prisoners in Her Majesty's prisons in Scotland should be humane and that a substantial period of their stay in prison must contain an element of rehabilitation. Many of them are not hardened criminals in the sense of the word but simply people who have suffered a momentary aberration which cost them dear in terms of loss of freedom. A number of them are weak and inadequate and are unable to cope with the many stresses and strains encountered in modern society.
Hence, the reason why I appreciate their need for training and rehabilitation. I also understand why reorganisation of work in prisons is necessary from time to time. The argument I put forward is an endeavour to show the Under-Secretary of State responsible for prisons in Scotland that outside industry is becoming acutely aware of the unfair disadvantage suffered by some firms in competition with prison-manufactured goods.
A few weeks ago my Question to the Under-Secretary of State revealed that there were 2,400 inmates in Scottish prisons engaged in the production of items of goods manufactured also by outside industry. The annual value of this production in the year ending 31st March, 1971, was approximately £850,000. The work carried out was mainly on textile goods and several other items. It is with textile production that I am concerned.
Some time ago a production director of a firm complained to me about a loss of orders due to half of a previous contract going to Her Majesty's prisons. I also had the same complaint from the sales director of a group of companies of which my local firm was a part. There is a genuine feeling that the competition

will become more severe as the years go on.
In the 1970 Report on Prisons in Scotland, the value of production rose over the previous year and it is obvious from the answer to my Question that in 1971 the amount was very much higher. It is quoted in the 1970 report as follows:
That with the progressive installation of new machinery and the provision of more spacious working areas the upward trend in output will be maintained".
The report also stated:
The textile industry was expanded by the opening of a further workshop at Perth".
The value of goods and services supplied in the year to 31st March, 1970, was £660,000. Comparing the year with the following year, it means that there was an increase of almost £200,000.
That brings me to the question of pricing policies. My information is that prisons tender for contracts to Government Departments and to private customers. In the case of the public sector, however, a system of priority operates for prison output in the following way. If the prison fails to tender the lowest price and thereby loses the contract, it has a priority option to supply as much as it can at the lowest contract price. Perhaps the Minister will indicate whether such a practice is operating in Scotland.
The Home Office recently intimated future policy with regard to prison industries. The Government supported the objective of making the industries economically viable and to improve the quality and availability of industrial work experience in prisons. At the same time, it was the intention of the Home Office to facilitate improved productivity and it was currently planning a considerable expansion in the scale of prison industries' operations.
There has been a progressive growth in the total turnover of prison industries over the past two decades. It is anticipated that the turnover will reach £20 million by 1980. It is natural that Scottish industrialists are becoming concerned about the future industrial role of Scottish prisons, particularly when the plan envisages that a growing share of the output of prison industries is likely to he sold to the private sector.
The production manager of Jeltex Ltd. in Dunfermline and the President


of the Dunfermline Chamber of Commerce see a continuation of this policy as a growing threat to textile firms. One example given by Mr. Leiser of Jeltex Ltd. demonstrated that in 1964 the firm had a contract to provide jackets for the National Coal Board. He claims that the firm had never fallen down on delivery, quality or price. Suddenly the firm lost half the £24,000 contract to Her Majesty's prisons. He further stated that the firm knew for a fact that the price quoted by the prisons for the jackets barely covered the cost of the material, never mind labour and overheads. For the price to be 17p below the price of Jeltex Ltd. for a garment costing £2 he felt was incredible. The prisoners are paid pocket-money, which makes a big difference for a start. Jeltex Ltd. felt that prisons were using cheap labour to undercut outside firms unfairly.
I have tried to deal with the general problem, on which I have not enough information. The subject is not one which is frequently aired. There is a reticence about raising the question because it is appreciated that, if people have to work in prison, it is as well for them to do useful work. However, I have raised a specific aspect of the problem—the case of the Dunfermline firm has been the basis of my complaint. I also know that the Dundee jute workers protested against the award of a large sack contract to Her Majesty's prisons.
There is high unemployment, and people are worried about future job security. The Dunfermline area has been badly hit, a number of factories having Gone out of existence and others having to reduce manpower because of lack of orders. The intention to expand prison industries enlarges these fears, and there is a likelihood that the trade unions will take a greater interest in the problem as more and more workers voice their fears. The sociological considerations of this aspect of prison life are manifestly correct, but on the other hand it would be wise to take heed of the developing situation wherein people are afraid for their jobs and employers are concerned about their business prospects.
Will the Minister answer the following questions? First, does he think that the fears expressed by me in the debate are real or unfounded? Second, what assurances can he give to employers and workers that the future industrial policies

of Her Majesty's prisons will not in any way create an element of unfair competition with outside industry? Third, is he prepared to change course if sufficient evidence comes along that certain firms are being adversely affected by contracts going to Her Majesty's prisons?
In conclusion, the subject is a difficult one to discuss, but I am sure that the Minister will agree that frankness on all aspects of it is the essence which will bring satisfaction to all concerned.

12.18 a.m.

The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office (Mr. Alick Buchanan-Smith): I thank the hon. Member for Dunfermline Burghs (Mr. Adam Hunter) for the responsible way in which he has dealt with this subject tonight. He mentioned a certain reticence in discussing these matters, but I assure him that I have no reticence whatever and consider that he has done well to air the subject. Only by airing the subject and getting a better understanding by industry and the public of what happens in prisons can we solve the problem of dealing with the rehabilitation of prisoners and see how prisons fit into the whole context of industrial and social life.
I thank the hon. Gentleman for giving me this opportunity to answer his points. He raised a number of real questions which he summarised for me, and I hope I shall be able to answer them. If there are any other points that arise when he thinks further about the matter, I shall be pleased to deal with them also.
I appreciate the hon. Gentleman's concern, but I would make clear that this concern is shared equally by the Scottish Office. We are mindful of the kind of problems to which he has drawn attention tonight.
The prison service today is confronted with a difficult task involving the custody, control and rehabilitation of inmates. If this is to be achieved, even in the smallest degree, I am sure that nobody would suggest that the mere locking up of a prisoner is sufficient. With the high inmate numbers with which we have to cope and the problems that this creates in relation to discipline and control within penal establishments, it is vital to keep inmates usefully occupied. This is not merely to avoid the very real


dangers of indiscipline through soul-sapping boredom, but as a social therapy in itself.
The primary objective of prison industries is to create in inmates the habit of doing useful work under conditions and at a tempo comparable to outside industry. We believe that this is the best way to equip them for their normal place in society when eventually they are released. Rehabilitation must not be merely a pious hope to which we all nod with unthinking acquiescence. Rehabilitation is something positive and requires considerable thought, planning and effort by all concerned in an attempt to devise ways of enhancing the confidence of prisoners, of instilling habits of work and, where possible, of imparting skills to enable the released prisoner to find a job to suit his capabilities. It is only by doing all this that the prison service can discharge the duty placed on it by Parliament; that duty is to fit the prisoner to lead a good and useful life or release.
We have progressed considerably from the days when the traditional forms of employment for prisoners were unimaginative and uninspiring. We are now reaching a stage where we can see the provision of work as a civilising element for those in need of training. It is a point to which we must pay increasing attention if we are to secure any measure of success in the important matter of rehabilitation. We must try to achieve variety, scope, interest and efficiency under the constraints of security in a prison environment while bearing as close a resemblance as possible to the sort of conditions the inmate will meet eventually in the outside world.
Having set out the background, I think it is important at this stage to set out as clearly as possible the size of the problem when viewed against the unemployment situation in Scotland as a whole and particularly in relation to the hon. Member's constituency.
The latest available figures for last year show that the value of production in Scottish penal establishments was £1,040,000. Roughly one-third of the total was accounted for by items for use in penal establishments themselves. They comprise such items as prisoners' clothing, bedding, prison furniture, and so on. All

but 6 per cent. of the remaining production was for other Government Departments, and the balancing 6 per cent. represented sales to the private sector. The actual sales to the private sector are a very small proportion of the total production from prisons.
The latest available figures for Scotland as a whole in respect of those industries in which Scottish prisons are involved show that the prison contribution amounted to only 0·06 per cent. of the total value of output. To put that in slightly more meaningful terms, it is the same as £6 in every £10,000 of output. When we allow for the fact that £2 of the £6 is consumed by the prisoners themselves, we are left with a figure of very insignificant proportions.
Notwithstanding this minute trading position, we are always mindful of the need to keep our marketing policy closely in step with that of outside manufacturers, and we achieve this in two basic ways.
I might say in passing that in setting the background and showing the value of output of the prison service and how small a proportion is released to private buyers outside, I do not minimise the fact that while 6 per cent. may not be very great when set against the total, it may mean a great deal to the individual firms affected by it. I do not belittle that point.

Mr. Hunter: The chief complaint of my constituent is that the type of article that he produces is considered to be at the unsophisticated end of textile production, and he feels that it is the sort of work which is easily done by people in prison.

Mr. Buchanan-Smith: I take the hon. Gentleman's point, and I shall elaborate on it later in my remarks. However, we are constantly seeking new ways, including seeking the co-operation of industry and commerce to suggest possible new ways, in which we can produce goods and do constructive work which is not in direct competition and causing difficulty of the kind to which the hon. Gentleman has drawn attention.
To return to this question of keeping our marketing policy in step with outside manufacturers, we try to achieve this in two basic ways. Here I come specifically to deal with some of the hon. Gentleman's points.
First, the costing of items manufactured for outside customers is based on the material costs, allowances being made for the higher than usual wastage in prison industries, plus a labour charge calculated at the current outside hourly rate for the trade concerned. I hope that that will put to rest the view that it is set at "pocket-money" levels. It is not. The hourly rates charged are taken from those published from time to time by the Department of Employment, taking into account the time that it would take a skilled tradesman to do the same job using modern equipment. To the total of these are added successively machinery charges, a percentage for overheads, a notional figure for national insurance contributions, a figure representing a profit margin and, finally, where appropriate, purchase tax. The aim is to arrive at a figure aproximating to the current market price. I think that that demonstrates that we base our prices on what happens in the outside world and not simply on the type of cost that we encounter in prisons. I believe that competition, such as it is, is therefore square and above board.
I appreciate that that begs the question of how do we know that the market price which we have calculated in this way is fair and representative for the product or industry at any time. In most instances we know what the market price is because of the priority supply arrangements for sales to Government Departments and because of the contracts that we have with other Government Departments. The hon. Gentleman asked whether the priority supply arrangements apply. I confirm that they do and because they apply they give access to knowledge of what the market price is of the goods that we are producing. We have a good idea of the current market prices of comparable products. We know the price of the materials which we have to buy and we can work out what the conversion cost is to outside industry.
Secondly—and this, too, will give the hon. Gentleman a certain amount of assurance—we try to make sure that no individual product or industry is allowed to attract an undue share of the market. This is important and I hope that it will assure those who have fears that we take an undue share of the market in which we are interested. I give the hon. Gentleman the assurance, which I hope he will

pass on, that officials of my Prisons Division will be prepared to discuss with any manufacturers or representatives questions of mutual concern about prison production. In any approach that is made to us I shall do all that I can to facilitate direct discussions. This is one way in which we can perhaps allay fears which may or may not be justified and it may also help to identify new ways in which we can move forward and reorganise things in a way which will meet the wishes of industry. We recognise the need for orderly marketing in relation to forward planning and development and we are prepared to play our part in achieving confidence and stability in the industrial market place.
I hope that I have answered most of the hon. Gentleman's general points and questions, and I should now like to deal more specifically with the questions raised by him about the firm of Jeltex. I think the hon. Gentleman appreciates that the contract in question was with the Home Department and not specifically with the Prison Service in Scotland. It would, therefore, be more correct for the Home Department to answer the hon. Gentleman, but I have taken the precaution of making inquiries about this contract.
It appears that the Prison Department of the Home Office was asked to quote to the National Coal Board for the supply of donkey jackets. As a result of its tender it was awarded part of the contract and it is my understanding—though this may conflict with other information—the remainder of the contract went to Remploy.
The contract was awarded directly by the National Coal Board—and this is important—and the priority suppliers procedure was not invoked in this contract. If, therefore, there was any feeling of unfairness about the procedure let me assure the hon. Gentleman that the priority suppliers procedure was not invoked on this contract, and that it was awarded directly. This means that the Prison Department of the Home Office was awarded the contract solely by the fact of having submitted the lowest price in competition with suppliers from the private sector.
In arriving at the price per jacket the Home Office was mindful of the Confederation of British Industries' undertaking on voluntary price restraint which


meant that the price it offered was no more than 5 per cent. above its earlier price for this article. It may be therefore that Jeltex who originally shared this contract and offered a price comparable with that of the Home Office increased its price by more than 5 per cent. on this occasion. I cannot be definitive in answering the hon. Gentleman, but I merely explain what I have understood about the Home Office contract.
I do not believe that there can be any question that the Home Office enjoyed any advantage in tendering for this contract, nor that its practice differed from that of the ordinary commercial company in any way.
Moving from that to the question of jute workers to whom the hon. Gentleman referred, I must tell him that I am conscious of the concern felt on this issue. Again I am slightly diffident about answering, because it affected the Home Office. However, the jute industry in Dundee voiced concern about this matter. My understanding in that particular case was that the concern was not so much the fact of the prison industries carrying out the work but that on that occasion the prison industry might he using materials in the contract which were in short supply at the time because of the Bangladesh and Pakistan jute supply situation and that, by virtue of this contract, it was denying raw materials which would otherwise be used to maintain employment in Dundee. Though this was essentially a different problem from the one concerning the hon. Member, the anxiety of my Department and of the Home Office to meet the problems of industry, insofar as is practicable in relation to our other aims, is demonstrated by the fact that on that occasion the contract was withdrawn because we did not want to create particular difficulties in view of the anxieties voiced. So although this was a different problem, it demonstrates our concern to meet the wishes of industry so far as is practicable.
In conclusion, whilst I have answered most of the questions raised, the one question I have not answered is about the policy we propose to follow in the future. I think that I have clarified the position on the background in the past. However, before I deal with my final point, I pay tribute to the co-opera-

tion we receive generally from industry and the trade unions in these matters.
The Scottish Trades Union Congress is very helpful and appreciates the problems we face in the need for rehabilitative and constructive work in prison industry. My officials are very glad at any time to meet individuals, firms or trade associations. In fact, my officials are meeting one trade association on a matter of wooden pallets in Glasgow tomorrow. This demonstrates our preparedness to meet them in cases of difficulty. Equally, we are glad to meet the CBI or the STUC at any time that they wish to discuss wider aspects of this matter.
But in relation to the course of action we should follow in the future, I should not like hon. Members to take away the impression that, having reached a particular standard and mixture of industrial production, we are content simply to allow things to move along exactly as they are, adjusting merely to changes in numbers of inmates as time goes on. On the contrary, within the context of our very small share of the market as a whole and of any individual market, we feel that there is genuinely further scope for development aimed at creating more efficient and effective production within prisons.
Therefore, in order to achieve our overall aims of rehabilitation, we intend to continue exploring ways of reorganising our prison industries, although I give the hon. Gentleman and others in the House who are interested the assurance that in doing so, we shall certainly bear in mind what has been said in the debate tonight.
I repeat my assurance that at any stage we would he glad to discuss with individuals, individual firms, trade associations or trade union organisations any specific or general difficulties as they arise.
Once again, I thank the hon. Gentleman for raising the debate. I hope that I have helped to clarify the position and have given him assurances about the future, although I should certainly want to reserve our freedom of action in trying to develop this work within the prison service.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes to One o'clock.